Inonvate Finance_Membership and Regulatory Sandboxes_15Dec

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This presentation was used by Innovate Finance in a first response to how the FCA Sandbox Project might map onto Innovate Finance Programmes and Policy Work and how a Virtual and an Umbrella Sandbox might be delivered.

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Inonvate Finance_Membership and Regulatory Sandboxes_15Dec

  1. 1. Member & Regulatory Sandboxes December 2015
  2. 2. 2 | As an Independent non-for-profit members association, InnFin is well positioned to support different uses for Regulatory Sandboxes  Innovate Finance has over 170 members where innovation in Financial Services is the common theme  Across the membership continuum Innovate Finance members have expressed a number of issues and barriers they seek assistance with  A number of issues and barriers can be addressed through the deployment of Member Sandbox solutions  A sandbox is a contained safe place to play – often an environment that is used to “test” a technological proof of concept prior to public release  A Regulatory Sandbox should be designed to use the knowledge of the greater community to accelerate new (little known) innovations  A number of key design principles MUST be adhered to regardless of Virtual or Umbrella Sandbox model  A Virtual Regulatory Sandbox can be up and running in Q1 2016  An Umbrella Sandbox could help expedite complex innovations that require extended consumer testing… but will need time to be evaluated
  3. 3. 3 | InnFin has over 170 members… innovation in FS is the common theme 3 Alternative Finance o Cyber Security Cyber Security Enterprise Software Capital Markets RegTech Financial Inclusion and Education Wealth Management Investment Solutions Banking Money Transfers and FX Payments Digital Currencies and Blockchain Insurance Telco
  4. 4. 4 | Across the membership continuum InnFin members have expressed a number of issues and barriers they seek assistance with 4 Can you help us get a bank account? Foreign Start-ups / BitCoin Plays Can you help us get on Institutional Preferred Suppliers? Lists Start-ups How can we work with institutions? Start-ups What are our compliance requirements? Start-ups to Institutions How is this area (going to be) regulated? Currency / Blockchain / DLT How can we expedite the authorisation process? Start-ups How do we demonstrate our use case to the community? Start-ups to Institutions How can we agree emerging interoperable standards? Start-ups to Institutions
  5. 5. 5 | A number of issues and barriers can be addressed through the deployment of Member Sandbox solutions 5 Start-ups Institutions • Bank account • Access to institutions • Preferred supplier access • Promotion • Showcase for technology • Prototype environment • Regulatory “Fit for Purpose” • Authorisation Approval • Compliance • Use case lab • Interoperable standards • Industry adoption Start-up Sandbox Showcase Sandbox Regulatory Sandbox Industry Sandbox Member Issues & Barriers Sandbox Solution
  6. 6. 6 | A sandbox is a contained safe place to play – often an “environment” that is used to “test” a technological proof of concept prior to public release 6 “A sandbox is a testing environment that isolates untested code changes and outright experimentation from the production environment or repository, in the context of software development…” Wikipedia – Software Development “A sandbox is a security mechanism for separating running programs. It is often used to execute untested code, or untrusted programs from unverified third parties, suppliers, untrusted users and untrusted websites.” Wikipedia – Computer Security
  7. 7. 7 | A Regulatory Sandbox should be designed to use the knowledge of the greater community to accelerate new (little known) innovations 7 • One of the largest barriers regulators face is new innovations and ways of working • Often, the knowledgebase of new innovations - how they work, and potential risks are rewards - is difficult to baseline and assess • By engaging the great community of financial services professionals in a structured process, knowledge and experience can be more rapidly built • The objective of defining this as a formal process in a Regulatory Sandbox should be to make transparent and accelerate the DECISION Diffusion of Innovation, Rogers Primary Innovation Scope of a Regulatory Sandbox
  8. 8. 8 | We have mapped the proposed FCA Virtual Sandbox and Umbrella Sandbox to the InnFin Solutions 8 Start-ups Institutions • Bank account • Access to institutions • Preferred supplier access • Promotion • Showcase for technology • Prototype environment • Regulatory “Fit for Purpose” • Authorisation Approval • Compliance • Use case lab • Interoperable standards • Industry adoption Start-up Sandbox Showcase Sandbox Regulatory Sandbox Industry Sandbox Member Issues & Barriers Sandbox Solution 1 FCA Virtual Sandbox 2 FCA Umbrella Sandbox
  9. 9. 9 | A number of key design principles MUST be adhered to regardless of Virtual or Umbrella Sandbox model  The ultimate objective of a Sandbox is to accelerate greater market competition and range of access to quality financial solutions by consumers  Sandboxes need to be open and accessible to all FinTech players, from seed start- ups to Institutions  All Sandbox applicants must pass a “fit for purposes” test prior to entry into the Sandbox  A joint working Steering Group should be established between Project Innovate and Industry / Membership Associations to foster collaboration  The collaboration should focus on the improvement of working processes and skill levels of ALL of the involved parties
  10. 10. 10 | A Virtual Regulatory Sandbox can be up and running in Q1 2016 10 InnFin Regulatory Sandbox 1 FCA Virtual Sandbox Improved “Fit for Purpose” Application Completion Support Case Worker Assist Quick Wins Implement Q1 16 Restricted Authorisation NAL / IG Waivers Analyse Q1/2 16 Implement Q2+ 16 New Regulatory Activity Broadening FSMA Waiver Test Amendment to Exemptions Order Analyse Q2/3+ 16 Implement Q3+ 16 Case Study 1 – RoboAdvice Case Study 2 – Block Chain Case Study 3 – RegTech
  11. 11. 11 | An Umbrella Sandbox could help expedite complex innovations that require extended consumer testing… but will need time to be evaluated KeyActivities Discovery & Planning Data Collection & Mobilisation Phase 1 Design & Selection Phase 1 Implementation & Execution Phase 1 Monitoring & Evaluation 1 2 3 4 5 Q1 16 Q2+ 16 Future dates TBC InnFin Industry Sandbox 2 FCA Umbrella Sandbox • Develop U-Sandbox Hypotheses Models • Engagement • Participants • Liability • Funding • Develop U-Sandbox Programme Plan • Roadmap / Delivs • Governance • Time Plan • Budget • Collect Data • Sandbox • Benchmark • Financial Models • Best Practices • Mobilise Community • Identify Team Members • Recruit Team Members • Perform Team Building • Design U-Sandbox Operating Models • Engagement • Participants • Liability • Funding • Evaluate & Select Operating Model • Consumer Test • Sandbox Test • Participant Test • Regulator Test • Implement U- Sandbox Op-Model • Engagement • Participants • Liability • Funding • Implement Governance & Control Processes • Organisation • Process & Controls • Monitor and Evaluate • Engagement • Participants • Liability • Funding • Build Feedback Loop and Improve • Engagement • Participants • Liability • Funding Example, Industry-led Umbrella Sandbox design and implementation roadmap U-Sandbox Plan U-Sandbox Options U-Sandbox Implementation
  12. 12. 12 | As an Independent non-for-profit members association, InnFin is well positioned to support different uses for Regulatory Sandboxes Product Testing Platform Testing RegTech Testing Delegated Supervision
  13. 13. | End 13

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