At the start of 2018, European lawmakers put a number of measures into place that they stated would usher in ‘open banking’. A year on, and Bloomberg report that this has had little effect in the UK; just 4 new bank licenses were issued in 2018. Simply put, the impetus from legislation is insufficient to force the big institutions into action; the EU is opening the door, but regulators need to make large-scale changes to open up the market.

Effective planning to maintain innovation

Fintech is a remarkably organic industry; start-ups have dominated proceedings, and are commanding huge fees from institutional investors looking not to be left behind. Few deals have outlined this more powerfully than the £9.2bn Worldpay buyout last year. However, Brexit imperils this landscape; several of the world’s leading law firms have noted the uncertainty associated with the exit deal and the rights of EU and international citizens in the UK. While a subsidiary concern to the subject matter of fintech innovation, it’s crucial that legislators get the house in order to engender continued innovation.

Providing impetus to change attitudes

The EU is putting further legislation into place at the end of 2019 that is intended to provide large banks with a kick up the backside. Currently, many larger banks are blissfully unaware of the innovation going on around them; one study, reported by Forbes, found that 8% of banks considered online statements alone to be a sign that theirservice is ‘truly digital’. The new legislation being introduced in the EU is designed to force banks to change by defining strict rules on what their services should offer in the future. UK lawmakers would be wise to adopt these regulations as their own; change must happen, with or without the express consent of big banks.

Creating better foundations for fintech

The drive towards digital technology has led to improper preparations by many financial institutions. This was felt keenly in 2018, where Barclays, HSBC, NatWest, RBS and TSB all had major outages. In the case of TSB, this caused widespread damage; internet banking operated at only 50% of capacity. Now, chair of the Parliament Treasury Committee Nicky Morgan is investigating the outage to aim to prevent future issues. This is clearly an utterly inappropriate platform for future fintech innovation, and is damaging to business; ComputerworldUK report that TSB had a huge drop in customers following their problems. Depending on the outcome of the treasury committee investigation, it may well become the rule that financial platforms have far more stringent levels of stress and security testing before they’re allowed to tender their goods. This is great news for fintech development.

As an international financial centre and huge economy, the UK has good reason to find new innovations in fintech. However, regulatory bodies need to react now to prevent problems before they flare up. Crises through the past year have shown that more needs to be done to protect the industry; 2019 should see defences and laws be shored up to promote further innovation.

By Chrissy Jones