FinTech North December Seminar
On 8th December, FinTech North held its December seminar at Platform in Leeds – a new flagship building in the heart of Leeds, featuring an impressive tech hub.
The event focused on more specific developments in FinTech such as ICOs, Innovative Finance ISAs and peer-to-peer lending.
The event began with a neworking breakfast before Julian Wells, Director, Whitecap Consulting kicked off proceedings with a quick overview of FinTech North and how it has grown. He thanked Leeds City Council for their support in running the monthly FinTech North seminars.
Julian also went through some of the previous events and initiatives that FinTech North has recently been involved in, including the DIT Northern Powerhouse Nordic-Baltic FinTech Mission. This initiative looked to showcase the Northern Powerhouse to visiting Nordic-Baltic FinTechs – you can read more about this visit here.
Philip Pawson – Innovative ISAs and P2P Lending
Philip Pawson from Alchemy began the keynote speeches on the topic of Innovative Finance (IF) ISAs. The Innovative ISA was introduced two years ago by the government to help people save money in a new way. Its popularity is growing with the UK population. The IF ISA is a specific ISA that is connected to alternative finance such as crowdfunding/P2P lending.
Philip explained the model of peer-to-peer (P2P) lending, highlighting how new innovations are coming into this lending sector. He explained how borrowers wanting to use P2P platforms may want to bring investors with them into the agreement, rather than only create new investor relationships. Further, he also explained how iterations and innovations within P2P can be, and are, fully compliant with regulation. This again reinforced the forward-thinking nature of finance regulation in the UK (a recurring theme through the event).
Mark Lumley – Initial Coin Offerings
Mark Lumley from Shulmans was up next to speak about Initial Coin Offerings. Mark has a RegTech and law background and opened his talk with how awareness of blockchain (and bitcoin) has grown over recent years.
“Bitcoin is now the 6th biggest currency on earth.”
Mark highlighted how accounting has gone through various evolutions. From the first being tallying – allowing people to keep a record of transactions, to the newest evolution of the ‘distributed ledger’. This consists of high level encryption, and is distributed across machines all over the world. He identified how these ledgers don’t have to hold just numbers – any data can be stored on these records. Mark highlighted how these distributed contracts can be put across multiple sectors, including the legal space.
He then moved onto IPOs and the new form, ICOs. He explained how IPOs are time consuming and costly and can have issues with security (in areas of KYC, money laundering etc). He introduced ICOs saying how they are cheap and potentially, quick. Mark then explained how people think ICOs are not regulated, when in fact regulation is moving forward.
He outlined the advantages of ICOs being that can be led by only a few people e.g. a tech team, PR team to put out information, a legal person and a few other developers. Entreprneurs explain what they will be using the blockchain for, and then build a coin offering on the back of this for investors to buy into.
“In the last week, there have been 6 coin launches that have been successful in raising $400 million dollars.”
Mark explained how China and South Korea are looking to ban ICOs as they cannot control/influence the value being put into these new projects.
“An ICO is a new way of financing, but also a new way of running projects. But they do need to be run right, and they do need regulating. I think ICOs are the third revolution of how accounting works.”
Mark then moved onto describing how cryptocurrencies in general are beginning to hit the mainstream markets, using an example of how Singapore is looking to replace its national currency with a cryptocurrency.
“If I was to make a prediction, I believe in 10 years’ time, the majority of the world’s currencies will be cryptocurrencies, in one way or another.”
Daniel Rajkumar – SME Acquisition Funding
Daniel Rajkumar, MD, rebuildingsociety.com was the third speaker at the event. He opened by encouraging FinTech North attendees to stay plugged into the Leeds FinTech scene as he believes there are real opportunities for collaboration moving forward with new and exciting ideas in financial technology.
Daniel explained the P2P lending model and how it has allowed more transparency in the lending sector, bringing lenders and borrowers closer together. P2P allows businesses to grow through acquisition, with no early repayment fees on loans. Action is the result of group agreement, and investors get to take advantage of the Innovative ISA.
Kylie Greeff – Regulation in FinTech
“FinTech is challenging regulators all over the world. Fortunately, the UK regulators have been supportive of FinTech developments so far.”
Kylie, Legal and Compliance Manager, rebuildingosociety.com explained how FinTech has changed access to financial opportunities. She highlighted how ‘borders have softened’ in who can become investors and that innovation has triggered this shift. There is a balancing act between industry and regulators. Industry needs to be able to develop technologies, safe in the knowledge that regulation supports them.
She highlighted how FCA is open and encouraging of innovation, in fact:
“Microsoft has said the FCA is the most FinTech friendly regulator in the world.”
Kylie described that Project Innovate, has two main strands: how regulators can actively support industry innovation, and how regulation may need to change to accommodate further innovation.
Kylie explained how bitcoin is one of the big areas that the FCA is now looking at. A discussion paper has been produced by the FCA looking at distributed ledger technology – this can be viewed here.
Consumer protection was another important point. Kylie explained that consumer protection is at the heart of regulation, and that any innovation that doesn’t account and deliver in this area will not be supported.
Kylie moved onto how FinTechs can best position themselves from a regulatory perspective – one of which being how open communication with regulators but also across the company is important in making sure everyone is on board and educated. She also looked at the future of regulation and how more tech solutions will be incorporated to solve regulatory problems – e.g. KYC, identification and authentication.
The speakers then came together with (chair) Julian Wells to lead a panel discussion covering the events topics.
Topics discussed were mainly centred around cryptocurrencies. This included the drivers of value in bitcoin and how cryptocurrencies will take over everyday transactions. Some concerns were raised around how adoption may not match bitcoins current worth, with a lot of investors relying on its potential use rather than current use.
“I know that I can take £10 sterling to a shop and expect to buy a certain amount of goods. With bitcoin, we have yet to really build up that confidence. But there is a lot of belief in potential”. – Mark Lumley.
“People clumsily compare bitcoin to the dot.com bubble. But then don’t forget that out of that bubble we have built a new world with new companies that are now a crucial part of our daily lives.” – Mark Lumley
Other discussions looked at the specifics of the Innovative ISA in P2P lending.
Julian closed the event by rounding up the value presented in the topics and thanked attendees and speakers.
The next FinTech North event will be on 12th January 2018. Details will be posted soon.