UK regulator puts out feelers for fourth wave of fintech firms
The UK’s Financial Conduct Authority (FCA) is now accepting applications from fintech firms to be part of its fourth sandbox phase.
Firms have until 31 January 2018 to submit their applications. The eligibility criteria, application form and instructions on how to apply are available here and it expects all accepted firms to be ready to begin testing from June 2018. It encourages applications from firms of all sizes.
In addition to the call, it has unveiled the firms that were successful in their applications to begin testing in the third cohort of the sandbox.
The sandbox allows firms to test products, services or business models in a live market environment, while “ensuring appropriate protections are in place”. It is part of Innovate, an initiative kicked off in 2014 to promote competition.
Christopher Woolard, executive director of strategy and competition at the FCA, says: “Since we first opened the sandbox, it has supported almost 70 firms in testing innovative new products and services. It is particularly encouraging that we are now seeing more applicants from outside London and a broader range of firms testing in the sandbox.”
The FCA received 61 submissions for the third phase of the regulatory sandbox. 18 applications met the sandbox eligibility criteria and were accepted to develop towards testing.
Accepted ideas cover a range of areas including blockchain-based payment services, regtech, general insurance, anti-money laundering (AML) controls, and biometric digital ID and know your customer (KYC) verification.
Over 40% of firms invited to test in cohort 3 are based outside London, compared to 35% in cohort 2 and 25% in cohort 1. The list for cohort 3:
- Barclays – Tracks updates to regulations within FCA Handbook and aligns implementation to Barclays’ internal policies;
- Barkat Ventures – Money transfer platform to send healthcare services along with remittances;
- Chynge – Distributed ledger technology (DLT) based payments powered by virtual, artificial intelligence (AI) compliance bot;
- Curl – Consumer payment network designed around open banking APIs, which works via @usernames and direct bank transfers;
- Economic Data Sciences – Uses AI to provide fund managers with a mathematically-defined trade-off during investment selection process;
- Etherisc – Uses smart-contracts on blockchain to provide automated decentralised flight insurance;
- first direct and Bud – App which learns customers’ attributes from transactional and demographic data to identify financial and non-financial products;
- FutureFlow – Transaction monitoring system to help prevent financial crime;
- Nationwide – Automated solution providing digital savings guidance and investment advice;
- Orca – P2P investment aggregation platform for portfolio of loans;
- reBank – Platform that puts business bank accounts into one login;
- ResonanceX – Electronic platform for automation of lifecycle management of products using centralised or blockchain asset custody;
- Sherpa Management Services – Insurance solution offering one account to set-up and manage insurance risks;
- Solidi – Blockchain-based payments platform;
- Spherical Defence Labs – API security system that detects hacks and breaches in banks;
- Square Book – Auction method of book-building for initial public offerings/private placements;
- Wrisk – Usage-based contents insurance product with risk scoring method;
- Yoti – Lets users create encrypted, biometric digital identity linked to government issued ID.