Watchdog doesn’t react quickly enough to tech trends

Friday, January 28, 2022 6:21 a.m.

Two-thirds of all UK banks and financial institutions think the city’s regulator, the FCA, doesn’t react quickly enough to new trends, hampering innovation in the sector.

Asked about the barriers they face, more than half said they have been prevented from testing new technologies due to a lack of formal guidance from UK regulators.

“Obviously the pace of change is a concern for many banks and financial services firms,” said Ion Fratiloiu of London-based agency Yobota, who looked at UK banks’ relationship with technology and finance. innovation and delivered the results.

Yobota also found that nearly half of all UK banks and financial institutions are concerned that their business is falling behind competitors in innovation.

“The fact that they feel they are falling behind is telling,” Fratiloiu said. AM City

“We should expect to see significant investment in fintech trends such as Banking-as-a-Service and integrated finance in 2022 as banks look to stay ahead of their competition.”

CAF response

When approached by AM City this afternoon, an FCA spokesperson said the regulator was on top of innovation and technological developments.

“CFA is recognized as a leader in our support for innovation. We have helped nearly 600 innovative companies advance to market and more than 150 have been accepted to test products or services safely in our regulatory sandbox, which was a world first,” said the carrier. word.

“Our work has helped the UK maintain its reputation as a global fintech hub.”

FCA spokesperson

He pointed out that the FCA offers “support for early stage and high growth companies, year-round applications for the Sandbox, with the Corporation of the City of London we have developed a digital Sandbox and we are connecting the Scaling businesses with our international peers, via the Global Financial Innovation Network.

Role of technology

The concerns come as three in four banks said more sophisticated use of technology is a key part of their company’s plan to improve its products and services in 2022, but half admitted to Yobota researchers that the upgrade Implementation of new technologies has been slow over the past year due to their organization’s reliance on legacy systems.

More generally, Yobota’s research showed that 73% of banks and financial services companies believe that financial institutions need to start operating more like technology companies if they are to offer innovative products and services to customers.

Additionally, 60% believe that neo-banks will one day overtake traditional top-tier banks, with 59% attributing this to their ability to respond more effectively to customer needs.

That said, most policymakers (63%) agreed that the level playing field between traditional banks and fintech companies has leveled off over the past 12 months.

“The pandemic has catalyzed changes in the banking sector. Technology now plays a much bigger role in enabling financial firms to deliver products, services and experiences to customers,” Fratiloiu concluded.

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