What next after Brexit?
Brexit will of course continue to create uncertainty and concern within the UK over the next year, as negotiations start to take shape. The financial services industry will be preparing for a rocky road ahead, but we’ll avoid the doomsday scenarios. The reality is that uncertainty has become the new normal and financial services will continue to operate within this continued state of ambiguity – slower, but without major catastrophe.
EU benefits, such as regulatory passporting rights are not the UK’s only draw. It took decades to develop the infrastructure of firms, services, lawyers, insurers and myriad of financial niches and massive personnel base that makes UK a financial services hub. Meanwhile, the FCA and the Bank of England are, as regulators go, innovative and progressive and will help drive future innovation in this space.
The ‘Regulatory Sandbox’, will help retain and attract top emerging companies in the FinTech space into the UK throughout the coming year. Moreover, the Chancellor announced in his Autumn Statement that the DIT will provide £500,000 a year for FinTech specialists. These initiatives will play a role in safeguarding the future of our global FinTech hub and ease the fears of existing industry players.
Will it get more difficult? Of course. But with contingency plans in place across individual enterprises, we’ll come out the other end.
On an even brighter note, financial services based in the UK need not limit global expansion to Europe. The growth of the world is focused in Asia and if exiting the EU means opening more opportunities to focus on growth further afield, 2017 is already looking a lot brighter.
RegTech the new FinTech?
Regulation is an inherent aspect of banking and it’s going to get a face lift in the New Year, with the emergence of RegTech – technology enterprises designed specifically to support financial services enterprises to comply with regulation. RegTech was born from the challenge that comes with monitoring risk in a data-driven world. This is crucial in financial services – businesses in this space are guarding people’s money, and identity. Innovation comes when there are inefficiencies in the current system, and the rise of RegTech tools is no exception. KYC (Know Your Customer) for example, is a critical responsibility, but how can it possibly make sense for customers to still have to scan a utility bill as part of the identification process?
However, the key thing to remember when considering RegTech solutions is that while you can outsource the data and the compliance checks, you can’t outsource the attitude. For a financial services firm, compliance isn’t a tick box exercise, it’s a fundamental part of the company and for that reason, it needs to be built into every stage of the business – extending beyond the compliance team to the wider company. If compliance isn’t built into the DNA of the company we have a problem. We have one of the most progressive financial regulatory landscapes in the world, so it’s crucial we work with it, rather than trying to battle against it.