LONDON: Bank of England Governor Mark Carney said on Wednesday the financial technology sector did not need the same level of regulation as banks, in the latest sign of Britain seeking to cement its position as a global fintech hub after Brexit.
The fast-emerging fintech sector is shaking up financial services and is forcing banks to make their operations leaner, and to offer more innovative products such as mobile payment services and other apps so as not to fall behind.
The government sees the sector boosting growth and offering job opportunities.
Fintech already employs more than 60,000 people in Britain, providing services like contactless payments, banking apps and online crowd funding, a sector worth nearly 7 billion pounds ($8.75 billion).
But with centers including Berlin and Luxembourg targeting UK fintech firms since last June’s Brexit vote, there have been worries that Britain might lose the talent, investment and market access that the sector depends on.
Carney’s reassurances on regulation underscore a supportive attitude from the government, which is seeking to avoid stifling innovation and sending firms to lighter-touch countries.
Speaking at a government-sponsored conference in London to promote investment in fintech, Carney said the fastest changes were taking place with payment providers, and with companies that aggregated consumer data to provide price comparison and switching services.
“In their current form, these innovations are simply a new front end to the banking system where fintech providers take a slice of customer revenue and loyalty but none of the associated risks,” Carney said.
“They have generally avoided undertaking traditional banking activities. So for now, absent a substantive change in business models or scale of activities, the Financial Policy Committee is unlikely to want to bring these firms into the regulatory perimeter.”
NO RESTING ON LAURELS
Britain’s Financial Conduct Authority said this week it saw no need for new rules for blockchain, the emerging technology underpinning bitcoin that is seen as having the potential to help make processes such as the settlement of securities transactions cheaper and quicker.
The FCA is hosting a summit on Wednesday to discuss what more regulators could do to help the fintech sector flourish.
Brexit provides a chance for Britain to forge a new role for itself in the global economy, finance minister Philip Hammond told the London conference, though it was important that Britain does not “rest on (its) laurels.”
“If the UK is going to make the most of the freedoms it will have after leaving the European Union we have to build trade links with the fast-growing economies of Asia, we have to invest in the skills of the future, and our economy must remain at the cutting edge, not just of fintech,” Hammond said.
Berlin has already sent representatives to London to try to persuade UK fintech firms to relocate, saying they would be then guaranteed access to the EU market after Brexit in 2019.
“By their very nature, these businesses are global in outlook and simply don’t understand why we would seek to divorce ourselves from the world’s largest single market,” said Susan Kramer, the Liberal Democrats’ Treasury spokeswoman.