Innovation. It’s a vital consideration for today’s banking firms.
With growing numbers of new competitors setting the bar when it comes to consumer choice, established banks might feel on the back foot.
Although a recent report by EY shows that you don’t need to be a start-up to be a disruptor – giving hope to traditional banks who want to move into this space.
But innovating in a way that meets the growing list of FCA requirements is vital.
And with a recent report showing that governance is increasingly important to your corporate reputation, it’s more crucial that you don’t forget compliance in your race to lead.
This can be tricky, though. A report late last year identified that banks’ fintech ambitions are being thwarted by regulatory compliance – frustrating the efforts of established financial services firms when it comes to new approaches.
How to innovate and stay compliant
The good news? There are ways you can move forward without falling foul of the rules.
And in a speech last month, Christopher Woolard, Executive Director of Strategy and Competition at the FCA, stressed the Authority’s support for innovative approaches.
Both are designed to help the FCA achieve its aim of an industry where competition benefits consumers. Woolard cited them as evidence of the ‘bold, pre-emptive and progressive’ approach the FCA takes.
How does the FCA measure success?
The speech identified three critical measures of success:
- Can we see more innovative firms entering the market?
- Is there greater innovation and competition by and between larger firms?
- And ultimately are consumers benefiting from that?
Woolard accepted that some of these measures will only become apparent after several years.
While he acknowledged a small dip in innovative firms wanting to enter the UK market following the EU referendum, he believes that the UK remains an attractive environment for innovation – and following this dip, applications for support actually increased from 264 in the nine months prior to the referendum to 321 in the nine months following it.
A new phase in regulatory support
The financial services market in the UK is fast-moving. The approach to innovation therefore needs to adapt and evolve in tandem.
Woolard’s speech claims that we are entering ‘a new phase’ for innovation. He also set out the Authority’s plans for the coming year in this area. These include:
- A broader remit for its Advice Unit, which helps firms develop automated advice models (so-called ‘robo-advice’)
- An increased role for its Innovate team, which will be expected to lead the conversation on emerging technologies and trends
- A greater focus on the international nature of innovation, with greater co-operation between regulatory bodies in different countries
- Closer work with regional fintech hubs – the speech mentioned the Edinburgh-Glasgow corridor and the Leeds-Manchester area in particular
Compliant innovation delivered
With the regulator’s clear willingness to support new approaches, it should be possible for firms to evolve in a way that complies with its requirements.
Whether you are a start-up or an established bank, creating customer-centric solutions is essential to your growth and success. With the FCA appearing to be in your corner, devising new approaches that meet regulatory requirements should be made easier.
And the clear focus on innovation means there are sure to be more developments as the year progresses. Watch this space for more news…
With innovations in delivery, communications and marketing moving at pace, the Authority needs to keep up by continually refining its approach to regulation. If digital marketing forms part of your innovation strategy, you will want to read our tips for compliant social media, which detail the Authority’s approach to Twitter, Linkedin, Facebook and other social media platforms.