Payments, Banking & FinTech Roundup: February 2021

As another month draws to a close, collaboration, cooperation and COVID-recovery continue to be strong themes within the industry.

Banking Circle’s latest whitepaper, Better Business Banking: Collaborating for success, revealed that a third of C-suite executives in banks across Europe intend to partner with a third-party service provider within the next year. That figure is on top of the half of respondents already working with third parties, or with plans to do so in the coming month.

In a webinar with UK Finance, we explored how industry partnerships are driving better banking, and looked into the challenges faced by banks as they work to futureproof their organisations. Sign up to watch the webinar on-demand here.

And finally, our CEO, Anders la Cour was interviewed by UKTN, sharing his thoughts on revolutionising the FinTech space, trends in the global payment industry and Banking Circle’s plans for 2021 and beyond. Read the full interview here.

Here are some other important stories from the industry you may have missed this month:

Kalifa review of UK FinTech is published

An independent review of the UK’s FinTech sector has been conducted by Ron Kalifa OBE, to identify priority areas of support needed. Whilst the UK has always been a hub for startups and business in the FinTech space, the report reveals the nation is at risk of losing its leading position. Funding in 2020 was down year-on-year, but the acceleration of digitalisation, especially in the financial services sector, means it has never been a more important time to embrace innovation.

With this in mind, the Kalifa report sets out recommendations to ensure the UK maintains its position as one of the world’s leading FinTech hubs. Our CEO, Anders la Cour, provided his comments on the release of the report.

Other suggestions from the report include the creation of a regulatory FinTech ‘scalebox’ to provide additional support to growth stage FinTechs, as well as a Centre for Finance, Innovation, and Technology, to strengthen national coordination across the ecosystem.

Read the report highlights here.

Plans for new ‘Tech Visas’ to boost UK FinTech industry

Rishi Sunak will be outlining details of a new scheme designed to attract global talent to UK start-ups and the FinTech sector, next month. The plans are expected to centre around new fast-track ‘Tech Visas’ which are likely to resemble the Global Talent Visas that were announced last year to draw leading scientists to the country.

The Global Talent Visa is part of Britain’s new post-Brexit points-based system for visas and immigration. While EU and non-EU citizens who want to live and work in the UK following Brexit must meet a specific set of requirements and points, the Global Talent Visa has no cap on numbers for those suitably qualified.

The Chancellor of the Exchequer is reported to be keen to maintain the UK’s status as a global hub for FinTech, and to avoid any issues that may arise from Brexit, especially with many firms in the sector relying on European talent.

UK Finance calls for regulators to promote FinTech cooperation

The trade body has called for ‘regulatory’ diplomacy, asking the Bank of England and the Financial Conduct Authority to collaborate with regulators in other countries to encourage them to open their domestic markets to UK-based financial service providers, as well as cooperate in areas such as AI and cybersecurity.

Recognising the financial services industry’s role in the country’s economic recovery following the pandemic, the report suggested that the UK should pioneer the innovation and expansion of cross border trading models based on recognition. The report also recommended the UK champion a range of World Trade Organisation-level initiatives that will support trade in financial services, as well as sustain the UK’s openness to imported financial services.

In addition, the proposals emphasised the importance of the UK continuing to play a leading role in setting international standards, as well as building a network of formal platforms for regulatory and supervisory cooperation.

The EBA encourages the removal of barriers to access under PSD2

The European Banking Authority (EBA) has published an opinion on the supervisory actions National Competent Authorities (NCAs) should be taking to make sure banks remove any remaining obstacles preventing third-party providers from accessing payments accounts.

These barriers restrict EU consumers’ choice of payment services, and so the EBA believes removing these will help to create a level playing field across the EU, as well as a consistent application and supervision of relevant requirements under the Payment Services Directive (PSD2) and the EBA regulatory technical standards on strong customer authentication (SCA) and common and secure communication.

The EBA states that national authorities should take supervisory actions by 30 April 2021 in cases where obstacles have not been removed and that those who fail to comply should face fines and sanctions.

IT changes a leading culprit for outages and disruptions at UK financial institutions

A report from the FCA has suggested that 17% of outages are due to IT changes gone wrong. The regulator stated that the higher the proportion of a financial institution’s IT budget went into change management, the more likely they were to achieve glitch-free tech changes. Companies that allocated between 50% and 75% of their IT budget to change management reported the lowest numbers of change-related incidents.

An over-reliance on legacy systems was also highlighted as a cause for disruptions faced by UK financial institutions. Surveying 23 firms, the report revealed that a third of companies (33%) relied mostly on legacy infrastructure, while 58% used it for “some” functions.

The OBIE publishes new paper

The Open Banking Implementation Entity (OBIE) has launched Evolving Open Banking Standards, regarding Confirmation of Payee (CoP) and Contingent Reimbursement Model (CRM) Code Consultation and its implications for open banking payment journeys.

The OBIE is welcoming stakeholder views on the new paper via its online Consultation Survey.

It will also be publishing a further preliminary analysis paper which will outline more details from the preliminary findings from the consumer research.

Find out more about the paper here.

Baker McKenzie launches series of briefings on the post-COVID landscape

Over the coming weeks, the law firm is holding a series of briefings on how financial institutions can navigate the post-COVID landscape, looking into how different industries have been affected, as well as the impact on the global economy.

Baker McKenzie’s legal experts will share their thoughts on the challenges and opportunities facing financial institutions, focusing on five key trends within the industry:

  • Rising global indebtedness
  • Shadow banking
  • Increasing regulatory scrutiny
  • The impact of new technology
  • Sustainable financial institutions

Find out more about the series here.