Other initiatives to guide new and innovative firms

Lowering barriers to entry and expansion

Tandem Bank (authorised in November 2015) is a digital-only retail bank that will operate your own finance guide which compares financial loans provided by both Tandem as well as its competitors. Other banks that are innovative in the pipeline for authorisation.

Other initiatives to guide new and innovative firms

The lender of England supports innovation in financial services through its work to promote innovative research and data analytics in central banking, and improving the ability of innovative firms to get into Bank of England facilities. The Bank has also embraced technology that is new the provision of UK banknotes.

Research and analytics

The lender launched its One Bank Research Agenda initiative in February 2015 to try and understand and develop innovative practice that is best in central banking, taking into account technological, institutional, social and environmental change.

It aims to facilitate dialogue that is open the lender in addition to research community to aid innovation and inform the Bank’s work. The lender has set up an investigation Hub division to aid drive this forward and developed a unique blog that is online Bank Underground.

The initiative covers research questions on five broad themes: policy frameworks and interactions; evaluating regulation, resolution and market structures; policy operationalisation and implementation; new data, methodologies and approaches; and reaction to change that is fundamental.

In particular the change that is fundamental takes a longer term have a look at how technological (and other) innovations might affect central banking over a lengthier horizon. This consists of, as an example, exploring the impact of digital currencies or alternative finance providers, and any associated economic, technological and regulatory challenges.

As part of its broader research agenda, the lender publishes new datasets to facilitate external research. This consists of long haul historical data, the lender of England’s balance sheet and data recorded by the Bank’s regional agents. The long-term plan is to open up a lot more of the Bank’s data into the public.

The lender in addition has put up an enhanced analytics division and data lab to exploit new and innovative analytical tools and techniques, analyse new data sources such as social networking, and help spread best practice when you look at the analysis of brand new big datasets both inside and outside the financial institution.

The division is also developing relationships with external partners in this area, and recently ran a data visualisation competition to engage with data scientists and students across the UK.

The Bank is conducting research into innovations in payments technology, with a particular focus on digital currencies and the distributed ledger systems that underpin them in the payments space.

This builds regarding the Quarterly Bulletin articles published by the financial institution in 2014, which considered the technical architecture of digital currencies, additionally the economic theories that govern how it works.

Polymer banknotes

Following extensive public consultation, the Bank announced in December 2013 that new Bank of England banknotes will now be printed on polymer. Polymer is a thin and plastic that is flexible that has benefits in addition to current paper banknotes.

Polymer notes are cleaner and more durable – these are generally more resistant to dirt and moisture, more environmentally friendly and last at least 2.5 times longer than paper banknotes. Polymer notes will also be more secure, with advanced security features that provide a step-change in counterfeit resilience. The full design associated with the Ј5 note is supposed to be unveiled on 2 June additionally the banknote introduced in September 2016, utilizing the Ј10 note issued in 2017, and Ј20 note by 2020.

Use of Bank of England facilities

The Bank has broadened the range of collateral accepted with its market operations to now include residential mortgages, asset finance, personal loans, automobile financing, corporate loans, SME loans and revolving credit facilities.

This permits access for a wider variety of counterparties – over 80 banks and building societies will have assets placed during the Bank, ready for usage in initiatives for instance the Funding for customwritingв„ў Lending Scheme. Tasks are underway to ensure that there are no obstacles that are technical the Bank’s ability to accept equities as collateral if the need arise.

As part of its strategy to broaden liquidity provision on the market, the Bank commenced operate in 2015 to assess the feasibility of establishing a Shari’ah compliant facility.

The Bank recognises the challenges Islamic banks face in meeting liquidity requirements with the current limited variety of options – existing facilities are not Shari’ah compliant as they involve interest-bearing activity. The lender in addition has become an associate member of the Islamic Financial Services Board (IFSB ).

With its provision of payment services, the lender has introduced prefunding for Bacs and Faster Payments, which lowers barriers to entry for banks and building societies trying to become members of these payment schemes.

Previously, an associate of the schemes needed to hold securities as collateral and commit to a mutual loss-sharing framework. Prefunding allows each institution to handle their exposure limit reserves that are using the lender.

In January 2016 the lender announced its want to design a blueprint money for hard times associated with the UK’s value that is high settlement system – the Real Time Gross Settlement System (RTGS ). The lender can look to redesign RTGS in such a way that its resilience is further enhanced, while at the same time innovation that is enabling.

2.8 How financial services regulators are better utilising new technologies to build efficiency savings and reduce burdens on business – RegTech

Regulators not just have a role to try out in promoting competition and innovation, but additionally in making use of advances that are technological reduce regulatory burdens on firms and drive efficiency savings. The FCA and PRA have already been particularly dedicated to this dilemma.

Firms have to meet higher regulatory standards and greater reporting requirements following the crisis that is financial. New technologies that help firms better manage these regulatory requirements and lower compliance costs (so-called RegTech) are great for effective competition and innovation.

The focus of these were to know:

The purpose of this consultation would be to seek views from the work of financial services regulators to support innovative technology and disruptive business models, and understand where there might be gaps in regulatory approach in terms of innovation that is supporting.

3.1 Consultation questions

The us government invites responses from all interested parties, in particular both regulated and unregulated firms and innovators into the financial services sector, from the following specific questions.

  1. Does the UK’s regulatory environment for financial services effectively support innovation?
  2. Do financial services regulators understand innovation in financial services and potential areas where new technologies and business that is disruptive might emerge in the sector?
  3. What are the gaps in approach or places where financial services regulators must certanly be doing more to guide technology that is innovative disruptive business models in financial services?
  4. Is there more that financial services regulators could do to better utilise new technologies to supply their work that is own more?

3.2 How exactly to respond

This consultation will run from 22 April to 6 May 2016.

Responses must certanly be sent by email to Innovation plan consultation.

Alternatively please send responses by post to:

Innovation Plan consultation
Banking and Credit team
HM Treasury
1 Horse Guards Road
London SW1A 2HQ

When responding, please say if you are making a representation with respect to a small business, individual or body that is representative. Into the full case of representative bodies, please provide info on the number and nature of individuals you represent.

3.3 Confidentiality

Information provided in reaction to this consultation, including information that is personal could be published on disclosed according to the access to information regimes. These are primarily the Freedom of data Act 2000 (FOIA), the information Protection Act 1988 (DPA) while the Environmental Information Regulations 2004.

That you provide to be treated as confidential, please be aware that, under the FOIA, there is a statutory code of practice with which public authorities must comply and which deals with, amongst other things, obligations of confidence if you want the information. In view of the it would be helpful in the event that you could explain to us why you regard the information and knowledge you have got provided as confidential.

When we receive a request for disclosure associated with information we will take full account of the explanation, but we can’t give an assurance that confidentiality could be maintained in all circumstances. An automatic confidentiality disclaimer generated by your IT system will not, of itself, be regarded as binding on HM Treasury.

HM Treasury will process your private data according to the DPA plus in the majority of circumstances this may mean that your private data will not be disclosed to parties that are third.