Lowering barriers to expansion and entry
Tandem Bank (authorised in November 2015) is a digital-only bank that is retail will operate an individual finance guide which compares lending options provided by both Tandem and its own competitors. Other banks that are innovative in the pipeline for authorisation.
Other initiatives to aid new and firms that are innovative
The Bank of England supports innovation in financial services through its work to promote research that is innovative data analytics in central banking, and improving the ability of innovative firms to gain access to Bank of England facilities. The financial institution has additionally embraced technology that is new the provision of UK banknotes.
Research and analytics
The financial institution 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 Bank as well as the research community to guide innovation and inform the Bank’s work. The lender has put up a study Hub division to aid drive this forward and developed an innovative new 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 response to change that is fundamental.
In particular the change that is fundamental takes a longer term look at how technological (as well as other) innovations might affect central banking over an extended horizon. This consists of, for example, examining the impact of digital currencies or finance that is alternative, and any associated economic, technological and regulatory challenges.
The Bank publishes new datasets to facilitate external research as part of its broader research agenda. This consists of long run historical data, the financial institution of England’s balance sheet and data recorded by the Bank’s regional agents. The long-term plan is to open up much more of the Bank’s data to the public.
The financial institution has additionally set up an advanced analytics division and data lab to exploit new and innovative analytical tools and techniques, analyse new data sources such as social media, and help spread practice that is best within the analysis of the latest 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 activate 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 Bank in 2014, which considered the technical architecture of digital currencies, and also the economic theories that govern how they work.
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 over and above current paper banknotes.
Polymer notes are cleaner and much more durable – they truly are more resistant to dirt and moisture, more environmentally friendly and last at the very least 2.5 times more than paper banknotes. Polymer notes will also be more secure, with advanced security features that offer a step-change in counterfeit resilience. The design that is full of Ј۵ note are going to be unveiled on 2 June together with banknote introduced in September 2016, with all the Ј۱۰ note issued in 2017, and Ј۲۰ note by 2020.
Use of Bank of England facilities
The lender has broadened the number of collateral accepted with its market operations to now include residential mortgages, asset finance, signature loans, auto loans, corporate loans, SME loans and credit that is revolving.
This allows access for a wider selection of counterparties – over 80 banks and building societies will have assets placed in the Bank, ready to be used in initiatives including the Funding for Lending Scheme. Tasks are underway to make sure 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 work with 2015 to evaluate the feasibility of establishing a Shari’ah compliant facility.
The lender recognises the challenges Islamic banks face in meeting liquidity requirements utilizing the current limited number of options – existing facilities are not Shari’ah compliant as they involve interest-bearing activity. The lender has also become an member that is associate of Islamic Financial Services Board (IFSB ).
With its provision of payment services, the financial institution has introduced prefunding for Bacs and Faster Payments, which lowers barriers to entry for banks and building societies get papers written for you trying to become people in these payment schemes.
Previously, a member of these schemes had to hold securities as collateral and commit to a mutual loss-sharing framework. Prefunding allows each institution to handle their exposure limit using reserves at the financial institution.
In January 2016 the Bank announced its plan to design a blueprint money for hard times associated with the UK’s value that is high settlement system – the true Time Gross Settlement System (RTGS ). The lender will look to redesign RTGS in such a manner that its resilience is further enhanced, while at exactly the same time enabling innovation.
۲٫۸ How services that are financial are better utilising new technologies to build efficiency savings and reduce burdens on business – RegTech
Regulators not only have a job to try out to promote competition and innovation, but also in using advances that are technological reduce regulatory burdens on firms and drive efficiency savings. The FCA and PRA have now been particularly focused on this dilemma.
Firms need 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 reduce compliance costs (so-called RegTech) are good for effective competition and innovation.
The main focus among these were to comprehend:
The goal of this consultation is to seek views regarding the work of financial services regulators to aid innovative technology and disruptive business models, and understand where there might be gaps in regulatory approach in terms of supporting innovation.
۳٫۱ Consultation questions
The us government invites responses from all interested parties, in particular both regulated and unregulated firms and innovators within the financial services sector, from the following questions that are specific.
- Does the UK’s environment that is regulatory financial services effectively support innovation?
- Do financial services regulators understand innovation in financial services and potential areas where new technologies and business that is disruptive might emerge when you look at the sector?
- Any kind of gaps in approach or areas where financial services regulators ought to be doing more to guide technology that is innovative disruptive business models in financial services?
- Will there be more that financial services regulators could do to better utilise new technologies to produce their work that is own more?
۳٫۲ 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
۱ Horse Guards Road
London SW1A 2HQ
When responding, please say if you’re making a representation on behalf of a business, individual or representative body. When you look at the full case of representative bodies, please provide information about the quantity and nature of people you represent.
Information provided in response for this consultation, including information that is personal could be published on disclosed in accordance with the access to information regimes. They are primarily the Freedom of data Act 2000 (FOIA), the Data Protection Act 1988 (DPA) in addition to Environmental Information Regulations 2004.
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