The USA and UK have set up a ‘Financial Innovation Partnership’ (FIP) to promote cooperation on regulatory issues and business development in financial technology, in a bid to develop both countries’ fintech sectors.
Announced as US president Donald Trump visited the UK last week, the FIP is being led by HM Treasury and the Department of the Treasury, and is designed to “build on and deepen bilateral engagement on emerging trends in financial services innovation.”
The partnership aims to “encourage collaboration in the private sector, sharing information and expertise about regulatory practices, and promoting growth and innovation”, the two countries said.
On regulation, it will “build on existing regulatory cooperation by discussing regulatory developments and sharing experiences on technical issues related to innovation in financial services.” And on the commercial side, it’s intended to “provide enhanced and regular opportunities” for companies to engage with industry associations and market participants across the Atlantic. The UK’s Department of International Trade (DIT) will bring UK firms to the US, with the US Commerce Department reciprocating.
The FIP has emerged from a US-UK Financial Regulatory Working Group, set up to encourage closer collaboration between the two countries’ treasuries and regulators. This group first met on 12 September in London, following up in Washington DC in May.
At the time of the working group’s launch, a statement said the enhanced co-operation was “especially important given transition in the UK’s regulatory relationships as it withdraws from the European Union (EU)”. The UK is due to leave the EU on 31 October, but prime minister Theresa May has quit and a leadership contest is not expected to identify her successor until late July.
Global fintech investment doubled in 2018 to US$111.8bn, according to a report by KMPG. The consultancy’s biannual ‘Pulse of Fintech’ analysis of global investment trends reported that half of 2018’s top 10 European fintech deals took place in the UK – a fact that cements London’s place as Europe’s fintech capital.
The KPMG report said that “open banking and open data continued to be key topics among fintech investors – not only in markets that have mandated or are in the process of implementing open data regimes, but also in markets interested in leveraging best practices as they are developed.”
In a statement announcing the FIP, Heath Tarbert, acting under-secretary for international affairs at the US Department of the Treasury, said: “Technology is the future of financial services, and innovation drives growth. By jointly fostering entrepreneurial breakthroughs, we will write a new chapter in the long-standing friendship between America and Britain.”
John Glen, economic secretary to HM Treasury, said: “The UK and US lead the world in financial services, and are at the cutting edge of innovative fintech. By working more closely together through this new partnership we can help firms in both our countries to go even further to harness new technologies, share expertise and serve consumers.” Those operating in fintech are wrestling with the implementation of MiFID II, Payments Service Directive (PSD2), General Data Protection Regulation (GDPR), new International Financial Reporting Standards (IFRS) and the EU Benchmark Regulation. These new rules “forced many organisations to adjust their operations” in 2018, according to KPMG’s report, which went on to say that the Fundamental Review of the Trading Book (FRTB) and the Central Securities Depositories Regulation (CSDR) “are expected to drive further change in 2019 and beyond”.