February has seen a number of regulatory updates, as well as more reports of growth within the UK FinTech sector.
At Banking Circle, we launched our new whitepaper, ‘Payments without Barriers: Focus on Denmark’, examining the potential from improved direct clearing via the Danish National Intraday Clearing System. Download the paper here or read our summary of the findings on the blog.
We also attended a webinar on Nordic FinTech Trends, which featured a spotlight on the Danish market. Read our key takeaways from that here.
Here are some other important stories from the industry you may have missed in February:
European Banking Federation publishes joint payments industry letter on final EDPB guidelines
The European Banking Federation (EBF), in conjunction with a number of EU payment sector associations, has published a joint letter on final European Data Protection Board (EDPB) guidelines on the interaction between PSD2 and GDPR.
The EBF has written to the European Data Protection Board, the European Commission, and the European Banking Authority (EBA), highlighting concerns that the enforcement of the guidelines will lead to an outcome that is not in line with PSD2 objectives, thus having a negative impact on innovation and competition within the payments industry.
London FinTechs received more investment than Europe, the Middle East and Africa combined
Data from KPMG shows that investment in UK FinTechs grew sevenfold in 2021, to $37.3bn, with London in particular attracting more funding than the rest of EMEA put together.
601 deals were finalised in the UK last year, up from 470 in 2020, with five out of the 10 largest FinTech deals in EMEA completed in the UK.
In particular, the payments sector continued to attract the most funding, accounting for $51.7bn in investment globally in 2021, compared to $29.1bn the year before.
Read more on that here.
The Payment Systems Regulator publishes final decision on Phase 2 of Confirmation of Payee
Following the Payment Systems Regulator (PSR) consultation at the end of last year, the organisation has published its final decision and specific direction on Phase 2 of Confirmation of Payee (CoP).
Effective from 11 February 2022, the PSR has given the following specific direction:
- Pay.UK to terminate the terms and conditions for participating in Phase 1, withdraw each PSPs CoP Phase 1 accreditation, and retire the phase 1 rules and standards on 31 May 2022.
- Pay.UK to notify the Open Banking Implementation Entity (OBIE) of this action, so the OBIE can close the Phase 1 technical environment.
- Phase 1 PSPs to regularly report to Pay.UK on their progress in migrating CoP traffic to the Phase 2 Open Banking environment by 1 May 2022. Pay.UK to pass this information to the PSR.
- Relevant PSPs to undergo enhanced reporting to both Pay.UK and the PSR if the PSR considers they are at significant risk of failing to migrate by 1 May 2022, with an obligation to implement a remediation plan agreed with the PSR.
UK report stresses the importance of data stewardship to AI in banking
The final report from the UK’s AI Public-Private Forum (AIPPF), set up in 2020 by the Bank of England, highlighted the importance of data quality in artificial intelligence (AI) operations for financial institutions.
It describes data as foundational for AI, and puts the recent growth of AI largely down to the surge in availability of data to contribute to models.
The forum’s report also draws attention to the necessity of tackling data quality, privacy, and monetisation, and urged banks to take these findings, using them as a roadmap to improve their data operations.
Read more about the report here.
Crypto.com report suggests that adoption of crypto is growing
Crypto.com published a new report, ‘Crypto for Payments’, in conjunction with Worldpay, looking at several areas of cryptocurrency in the payments space, including interest, payment mediums, and its growth as a payment method.
Surveying over 110,000 users from Crypto.com and Worldpay’s base of approximately 1.5 million merchants, the report found that 60% of merchants would like to accept cryptocurrency as a payment medium this year, however currently only 4% do.
The report does however point to several indications that adoption of cryptocurrency is growing, and cryptocurrencies with the greatest preference are Bitcoin, Ethereum, and USDC.
See the report here.
A year on from the Kalifa Review
February 26 marked the one-year anniversary of the Kalifa Review, an independent review of the FinTech sector by Ron Kalifa OBE. The report laid out suggestions for how to create high-skilled jobs throughout the UK, boost trade and extend the UK’s competitive edge over other leading FinTech hubs.
A new article in the publication, Business Leader, looks at what has been implemented 12 months on, examining the impact it has had on the industry, and highlighting what more needs to be done. Read that here.