Payments, Banking & FinTech roundup: April 2022

New reports, research and updates from regulators have dominated industry news during April.

It was also a busy month at Banking Circle.

Banking Circle Group expanded its financial ecosystem with the acquisition of specialist Account-to-Account payment method provider, SEPAexpress.

We also adopted the ISO20022 messaging standard, three years ahead of the 2025 deadline for completion. A single common format for all financial communications, ISO20022 allows participants and systems in different markets to communicate in a consistent message format, using agreed terminology.

Here are some other important stories from the industry you may have missed in April:

New paper from the Bank for International Settlements explores how CBDCs may help support financial inclusion

A new research paper from the Bank for International Settlements (BIS) shows how central banks are considering how retail central bank digital currencies (CBDCs) could be a valuable tool to support financial inclusion – particularly if it’s something considered in the design from the beginning.

The paper features interviews with nine central banks, alongside research and policy work at the BIS and World Bank. It investigates challenges, risks and regulatory and legal implications around CBDCs.

View the paper here.

European Commission launches consultation on digital euro

As the European Central Bank (ECB) leads the efforts to create a CBDC, the European Commission has launched a public consultation to gather information on the potential of a digital euro, and to understand how a CBDC would interact with other forms of payment.

The Directorate General for Financial Stability, Financial Services and Capital Markets Union of the European Commission will prepare an assessment based on the expected impact of a digital euro on key industries, users, chambers of commerce and other international trade stakeholders.

The Commission’s consultation is accepting comments until June 14 2022, and will concentrate on issues such as privacy and data protection, international payments, and users’ needs and expectations for a digital euro.

Read more on that here.

Prudential Regulatory Authority set to raise levy by £24 million

The Bank of England has plans to increase the levy charged to financial firms by £24 million to allow it to hire 100 new staff for the Prudential Regulatory Authority (PRA) and to keep up with innovation and emerging risks, from factors such as ongoing digitalisation of financial assets, the growth of crypto assets and increasing use of AI and machine learning.

The PRA, which supervises approximately 1,500 financial institutions including banks and insurance companies, has taken on new responsibilities for managing systemic risk following the UK’s exit from the EU. Head of the PRA and Bank of England deputy governor, Sam Woods, claims the additional responsibilities cannot be covered without the additional recruitment.

Find more on that here.

Confederation of British Industry launches campaign to get UK businesses to embrace FinTech

The Confederation of British Industry (CBI) has launched a campaign, ‘Winning with Fintech’  to encourage more businesses to use FinTech to fuel growth.

It is designed to promote the UK FinTech scene, by helping non-financial firms gain a better understanding of the sector, as well as exploring how firms can work more effectively with FinTech to unlock growth and efficiency opportunities.

The campaign will also focus on opening up new markets, improving payment flows, and transitioning to net zero.

Find out more here.

UK Treasury moves forward with plans to regulate stablecoins

HM Treasury has published its UK regulatory approach to cryptoassets, stablecoins, and distributed ledger technology (DLT), following its consultation and call for evidence in January 2021.

The response confirms the UK government’s intention to bring activities that issue or facilitate the use of stablecoins used as a means of payment into the UK regulatory regime.

Further consultations on other cryptocurrencies are scheduled to take place later in the year and in addition, a regulatory sandbox is set to be established to explore the use of DLT in financial market infrastructures.

Read more about further proposals planned here.

Global FinTech funding down in Q1

Global FinTech funding has slowed down in the first quarter of this year, according to the new ‘State of Fintech Q1’22 Report’ from technology markets insight company, CB Insights.

Following record levels in 2021, global FinTech funding dipped in Q1 2022, at $28.8b, an 18% decrease on the previous quarter, which marks the biggest drop in quarterly funding since 2018.

This comes despite deals reaching new heights across sectors and regions.

The report looks at how FinTech saw record deal activity despite the funding decline, as well as the world’s top FinTech investors.

Access the report here.

Bank of England invites comments on proposals on FMI outsourcing and third-party risk management

The Bank of England (BoE) has set out its proposals in relation to outsourcing and third-party risk management in Financial Market Infrastructures (FMIs).

They are set out in three draft supervisory statements for central counterparties (CCPs), central securities depositories (CSDs) and recognised payment system operators (RPSOs) and specified service providers (SSPs).

The aim of this is to:

  • Facilitate greater resilience and adoption of the cloud and other new technologies
  • Outline the BoE’s requirements and expectations in relation to outsourcing and third party risk management in Financial Market Infrastructures (FMIs)
  • Complement the BoE’s Supervisory Statements on FMI operational resilience

Feedback is being invited on the proposals, with the consultation closing on July 14 2022. Read more here.

Financial Conduct Authority publishes new report on AML

The Financial Conduct Authority (FCA) has published a new report detailing a three year strategy for tackling fraud, market abuse, money laundering, sanction evasion and terrorist financing.

As well as committing to being more proactive with its supervision, the FCA will also continue to monitor social media for advertising that raises suspicion of fraud, or breaks its rules.

The report also highlights the role of cryptocurrency in AML and the FCA has stated it will intervene in cases where cryptoasset firms are at risk of being used as conduits for illegal activity, or where firms pose harm to consumers of market integrity.

As part of its new approach to AML, the regulatory body is becoming increasingly ‘data-led’ to enable it to detect financial crime faster.

Read the report here.

Bank for International Settlements publishes speech on building a European robust and diversified clearing system

Fabio Panetta, Member of the Executive Board of the European Central Bank, delivered a speech at the Fourth Annual Joint Conference of the Deutsche Bundesbank, European Central Bank and Federal Reserve Bank of Chicago on CCP Risk Management, discussing the sanctions agreed by the EU, in light of acts of aggression against the people of Ukraine.

In the speech, which was published on the Bank for International Settlement (BIS) website, Fabio detailed how the global clearing ecosystem could benefit from more clearing options to make sure that there is always access to safe and efficient clearing solutions.

The new product offerings, risk profiles and approaches to risk management that come from the evolution of clearing markets, require supervisory and regulatory approaches to be adapted, he said. Fabio also spoke of the joint responsibility needed to make sure that clearing helps to make financial markets safe and sustainable.

Read the full speech here.


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