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Tuesday 11 December 2018


UK banks join latest FCA sandbox cohort

Written by Chris Lemmon

Barclays, Nationwide and first direct are among the participants revealed to be in the third cohort of the Financial Conduct Authority (FCA) regulatory sandbox.

The sandbox allows firms to test innovative products, services or business models in a live market environment, while ensuring that appropriate protections are in place. It is part of Innovate, an initiative kicked off by the FCA in 2014 to promote financial services competition in the interest of consumers. The sandbox was a first among regulators worldwide at the time.

The FCA received 61 submissions for this third sandbox, and 18 companies met the eligibility criteria and were accepted to develop towards testing. The propositions cover a range of areas including blockchain-based payment services, RegTech propositions, general insurance, AML controls, and biometric digital ID and Know Your Customer (KYC) verification:

Barclays – RegTech proposition which tracks updates to regulations within the FCA Handbook and aligns their implementation to Barclays’ internal policies.

Barkat Ventures – International money transfer platform that enables customers to send healthcare services along with their remittances.

Chynge – DLT-based cross-border money remittance system that incorporates a transaction monitoring system which is powered by a virtual, artificial intelligence compliance bot to tackle money laundering, terrorism financing and fraud more efficiently.

Curl – New consumer payment network designed around Open Banking APIs, which works via @usernames and direct bank transfers.

Economic Data Sciences – Technology solution that utilises artificial intelligence to provide fund managers with a mathematically defined optimal trade-off among a number of risks and objectives during the investment selection process.

Etherisc – Uses smart contracts on a blockchain to provide fully 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 from a marketplace of first direct, HSBC and external institutions.

FutureFlow – Transaction monitoring system that monitors the movement of money through the economy by tagging individual units of value in transaction amounts and facilitates the sharing of anonymised information between parties in order to help prevent financial crime.

Nationwide – Automated solution providing digital savings guidance and investment advice.

Orca – P2P investment aggregation platform that facilitates investment in a diversified portfolio of P2P loans.

Rebank – Platform that consolidates business bank accounts into one login. Using predictive algorithms, Rebank offers businesses the potential to improve the efficiency of their banking tasks and business payments.

ResonanceX – New electronic platform that enables end-to-end automation of price discovery, execution and lifecycle management of structured products using centralised or blockchain asset custody.

Sherpa Management Services – Insurance solution that offers members one account to set up and manage multiple insurance risks. Sherpa offer dynamic products which provide the ability to increase and decrease the sum assured as needs change.

Solidi – Blockchain-based payments platform that uses cryptocurrencies to facilitate money remittance at a faster speed and with lower transaction costs.

Spherical Defence Labs
– Application Programming Interface (API) security system that detects advanced hacks and breaches in banks powered by deep learning and computational linguistics.

Square Book – New auction method of book-building for initial public offerings/private placements that aims to be more transparent than existing methodologies.

Wrisk – Usage-based contents insurance product with innovative risk scoring method.

Yoti – Technology provider that lets users create an encrypted, biometric digital identity linked to their government issued ID. Yoti lets users of the app actively consent to share their verified identity details with financial institutions for use in KYC verification.

Christopher Woolard, executive director of strategy and competition at the FCA, commented: “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.

“As we open the application window for our next sandbox cohort, we continue to encourage applications from firms of all sizes and from a wide range of sectors, including sectors we haven’t seen heavily represented in the sandbox to date.”

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