The rapid development of fintech including big data, blockchain and cloud computing is bringing significant changes to the financial industry as well as challenges to the financial regulation. In such circumstances, the ability to innovate in fintech industry requires not only a diversity of skills, but also time and space in which ideas can be explored and possibilities unlocked.
Consequently, the Financial Conduct Authority (FCA)'s regulatory sandbox is now underway in the UK, providing financial innovators with the room to innovate. As outlined by the FCA, the regulatory sandbox is intended to be a "safe space" where companies can test different financial innovations in a live environment with consumer protection in place, but without the full burden of regulation.
To get a thorough understanding of the FCA sandbox, we went to London in October 2017 and met with several fintech companies from the first and second cohort of the FCA sandbox, and regulators including FCA and Bank of England. Through those meetings, we learned their experience in the sandbox including their concerns regarding the test, and how they interacted with FCA during the test, and how their concerns were addressed, etc.
Consisting of a group of companies that use technology to help businesses comply with regulations efficiently and inexpensively, regtech can help to reduce risks and costs. The complex and fragmented regulatory environment in Asia makes regtech become one of the hottest trends in financial services industry in China. To know how regtech improves the efficiency of regulatory compliance and helps businesses grow, we met with twelve fintech companies in the FCA sandbox in London, talked to founders of these companies and learned the leading development of regtech. They are: Assure Hedge, Beekin, BlockEX, Evalue, Issufy, Laka, Nimbla, Nivaura, Otonomos, Pariti, Paylinko and SETL.
"It is necessary for us to gain a better understanding of financial regulatory policies and innovative regulatory initiatives in leading countries and explore targeted financial regulatory programs with regulatory leaders, " said Professor Li Liao, Executive Associate Dean of Tsinghua PBCSF and Head of Fintech Lab, "We hope our visit to London would connect leading domestic and international fintech startups and regulators, and we believe the global visit will benefit research, industry knowledge sharing and regulation. "
