Jul 11, 2021

The UK's fintech golden opportunity

Fintech
Finance
BlendNetwork
Brexit
Yann Murciano, CEO, Blend Netw...
3 min
Yann Murciano examines how post-Brexit finance in the UK could lay the foundation for renewed leadership in global fintech

The UK’s exit from the European Union (EU) was finally completed on 1 January 2021, nearly five years after the Brexit referendum of 2016. In a recent article, the UK’s Financial Times argued that while Britain’s departure from the EU has so far thrown up more challenges than opportunities for the country’s finance industry, fintech offered a way out of the Brexit blind. And the FT is not alone in singling out fintech as an industry where, if appropriate steps are taken to support the sector, the UK could become a powerhouse in the post-Brexit world. 

Indeed, the UK Government’s Kalifa Fintech Review, an independent report commissioned by HM Treasury and spearheaded by British entrepreneur Ron Kalifa, suggests that innovation in fintech has the potential to maintain the UK’s status as world leader in finance post-Brexit. This is a sector where the UK already excels: Britain’s fintech market accounts for 10% of the global market share and generates £11bn in annual revenue; the UK fintech investment totalled US$4.1bn in 2020, which was more than the next five European countries combined. 

Could post-Brexit UK become a fintech powerhouse? I strongly believe the answer is entirely dependent on having a clear roadmap and an effective plan for the transformation of the UK into a global fintech hub and a centre for entrepreneurship by taking advantage of London’s pioneer role in regulation. 

The UK, and London in particular, has a number of key advantages: it is a global financial centre, has a cluster of world-leading financial institutions, ranks number three globally in terms of market value of Top 200 global financial institutions ($100mn), has a cluster of top research universities and ranks number two in comprehensive strength of top world universities, and is a global pioneer in fintech regulation (having the first regulatory sandbox). Of course, it also faces a number of high-profile contenders for the role of global fintech hub.

So, what are the fintech opportunities for London and for the UK in the post-Brexit era? Since the start of Project Innovate in October 2014, the Financial Conduct Authority (FCA) has led the UK’s regulatory leadership and helped unleash the potential of financial institutions. For example, it encouraged the trialling of self-regulation within the industry (the first P2P industry association in the world), and encouraged the industry to develop virtual sandboxes or umbrella sandboxes. It also facilitated collaboration and partnerships between traditional financial institutions and challenger contenders by encouraging the early adoption of fintech and solutions such as Open Banking. For example, in November 2016, the UK regulators encouraged large financial institutions such as HSBC to collaborate with start-ups. In line with this, I strongly believe the opportunities lie in expanding the UK’s regulatory leadership and unleashing the potential of financial institutions. 

Post-Brexit UK’s roadmap to becoming a fintech powerhouse must include three key elements to ensure appropriate resources are diverted to where they are most required: a plan for becoming a global leader in technology talent, a strategy for fostering close collaboration between industry and academic research, and appropriate policy support will form an effective plan for becoming a fintech powerhouse. On the talent front, the focus and attention needs to be not only on attracting and keeping a large pool of non-native talent, but also on supporting local talent and skills in fintech through initiatives such as Innovate Finance’s ‘FinTech For Schools’ programme, which aims to promote awareness of fintech in young people and to showcase the very diverse range of ways to get involved and to inspire the current and next generation of innovators.

This article was contributed by Yann Murciano, CEO, Blend Network

About Blend Network

Blend Network is a FinTech company, a fully automated and operational next generation real estate lending marketplace that allows investors to invest from £1,000 in 8-12% return p.a. property secured loans and allows property developers to borrow development finance from £150,000 to £3,000,000. More information can be found at www.blendnetwork.com 

BLEND Loan Network Limited is authorised and regulated by the Financial Conduct Authority (Reg No: 913456).

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Jul 29, 2021

BIS and MAS publish blueprint for cross-border payment idea

Fintech
BIS
MAS
transfers
2 min
The Bank for International Settlements and the Monetary Authority of Singapore have published a blueprint for real-time payment systems across borders

The Bank for International Settlements and the Monetary Authority of Singapore (MAS) has published a proposed blueprint for the multilateral linking of domestic real-time payment systems across borders.

The blueprint, titled Project Nexus, outlines how countries can fully integrate their retail payment systems onto a single cross-border network, allowing customers to make cross-border transfers instantly and securely via their mobile phones or internet devices. 

The Nexus blueprint was developed through consultation with multiple central banks and financial institutions across the globe. It builds on the bilateral linkage between Singapore's PayNow and Thailand's PromptPay, launched in April 2021, and benefits from the experience of the National Payments Corporation of India's (NPCI) development and operation of the Unified Payments Interface (UPI) system.

The Nexus blueprint comprises two main elements: 

  • Nexus Gateways, to be developed and implemented by the operators of participating countries' national payment systems, will serve to coordinate compliance, foreign exchange conversion, message translation and the sequencing of payments among all participants. These gateways will be predicated on a common set of technical standards, functionalities and operational guidelines set out within the proposal. 
  • An overarching Nexus Scheme that sets out the governance framework and rulebook for participating retail payment systems, banks and payment service providers to coordinate and effect cross-border payments through the network. 

“To achieve significant cost-reduction in cross-border payment transfers, enhancements must be made on two fronts: direct connectivity between domestic faster payment systems, and frictionless foreign exchange on shared common wholesale settlement infrastructures. The BIS Innovation Hub Singapore Centre is working on both. The Nexus project maps out a much-needed set of standards to achieve seamless cross-border payment systems connectivity.” said Sopnendu Mohanty, Chief FinTech Officer, MAS.

 

How do cross-border payments work?

 

Cross-border payments are currency transactions between people or businesses that are in different countries. The sender will choose a front-end provider, such as a bank or a money transfer operator (e.g. Transferwise), to initiate the payment. The receiver then receives the payment via the medium specified by the sender. Traditionally, cross-border payments flow via the correspondent banking network (CBN) which most front-end providers use to settle the payment. But, in recent years, new back-end networks emerged to optimise cross-border payments and enable interoperability between payment methods and provide senders with more possibilities to reach the receiver.

The increased international mobility of goods, services, capital, and people have contributed to the growing economic importance of cross-border payments. The value of cross-border payments is estimated to increase from almost $150 trillion in 2017 to over $250 trillion by 2027, equating to a rise of over $100 trillion in just 10 years.

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