Shoosmiths recently sponsored the UK Finance Digital Innovation Summit, a gathering of leading minds in the financial industry, to discuss the latest trends and challenges in FinTech.
The event brought together speakers from business, government and academia as well as regulators, to explore the emerging technologies that will transform finance.
Here Shoosmiths partner and co-head of the Blockchain & Digital Assets, Sam Tyfield and commercial partner Luke Stubbs share their key takeaways from the event:
FinTech Regulation
The regulation of FinTech is becoming increasingly complex, with various sources of rules and guidelines. The rise of AI in the financial sector presents both opportunities and challenges. Understanding the true cost of AI versus the perceived efficiency gains is crucial.
With growth in the number of FinTechs and other payment service providers using Open Banking architecture, some speakers touched on the need to find a sustainable and fair funding model for the OBIE / Future Entity, reducing the burden on the CMA9. The funding model for the Payment Systems Regulator was also raised.
Big Tech in Payments
2024 could be the year "big tech" companies make significant inroads into the payments market, especially if they harness the power of AI. Traditional financial institutions are also investing heavily in transforming their payment operations. Open Banking, though lacking a "wow factor" for retailers, could see increased adoption if it starts from different angles, such as refund processes.
London vs. New York
Despite New York's prominence in finance, London remains a global financial centre with better international connectivity. Singapore is considered London's real competition.
The Future of Crypto
While the concept of cryptocurrency faced challenges in 2023, crypto technology's evolution may offer more to mainstream financial services in 2024 and potentially disrupt traditional banks.
Combatting Fraud
Fraud remains a major concern, but technologies like tokenisation and AI could prove effective tools against it. The future might witness a battle between rival AI systems in fraud prevention.
FinTech Investment Trends
Investment in FinTech is shifting towards series B and C rounds, with investors looking for tangible products over pure services businesses. There's also a growing focus on investments that make a difference in Environmental, Social, and Governance (ESG) and Equality, Diversity, and Inclusion (EDI) terms.
Tokenisation and the Digital Markets - What are the Next Steps?
Shoosmiths partner and co-head of the Blockchain & Digital Assets, Sam Tyfield, took part as a panellist in a session held during the event which discussed the ongoing digital transformation of financial markets, particularly focusing on tokenisation – the process of digitising real financial assets. The session explored the potential of tokenisation to enhance market efficiency, increase choice, and deliver better outcomes for investors. It referenced a report released by UK Finance in July titled "Unlocking the Power of Securities Tokenisation," which presented a roadmap for the UK in this context.
The session aimed to address the progress made in the field of tokenisation and what steps are necessary to foster a thriving digital market in the UK. The panel also included Yvonne Deane Harte, Principal, Capital Markets and Wholesale Policy, UK Finance, Sabih Behzad, Head of Digital Assets and Currencies Transformation, Deutsche Bank and Scott A Lucas, Managing Director, Head of Markets DLT, J.P. Morgan.
The discussion delved into various aspects of tokenisation, its impact on the financial industry, and the strategic measures required to realise its full potential in the UK market.
In summary, the Digital Innovation Summit highlighted the evolving landscape of FinTech and the challenges and opportunities it presents.
Disclaimer
This information is for general information purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. Please contact us for specific advice on your circumstances. © Shoosmiths LLP 2024.