FinTech North News and Regional FinTech Developments

Leeds FinTech Day Event Write Up

On the 23rd March 2018, industry professionals gathered for Leeds Fintech Day, organised by FinTech North and University of Leeds, supported by Leeds City Council, Department for International Trade and Squire Patton Boggs.

David Hogg, Professor of Artificial Intelligence, University of Leeds kicked off the event by welcoming attendees and thanking FinTech North and the sponsors for their support. He spoke about Leeds being a powerhouse of financial services and tech in the north and how the university is hoping to mirror that strength and capitalise on the opportunity it offers. He stated how University of Leeds wants to continue to play an important role in supporting the city’s key sectors though collaboration.

University of Leeds will be opening its flagship innovation project, Nexus, later this year. This £40m building will be used for a range of purposes including as an accelerator for FinTech and financial services innovation. The University is also developing an MSc in Financial Technology – due to be finalised in 2019.

Julian Wells, Director, FinTech North & Whitecap Consulting was next up, providing an update on FinTech North’s recent activity including attending the Innovate Finance Global Summit, where we hosted two regional FinTech sessions. There seems to be an increasing focus on the regional FinTech economy and whilst this is not contained to the north, it seems the Northern Powerhouse is taking a leading position.

The growing focus on the regions is really exciting to see – the north is firmly in the mix of the evolution of the UK’s FinTech economy –  Julian Wells, Director, Whitecap Consulting & FinTech North.

Julian also spoke about the upcoming FinTech North conference in Leeds on 26th April, here attendees can expect to hear from: FCA, Northern Powerhouse Partnership, CBI, Innovate Finance, TISA, First Direct, CYBG, Computershare, IMC, NorthInvest and many others. Click here for more information on FinTech North Leeds 2018. (LINK) 

Chris Sier, FinTech Envoy (England)

Chris began his talk by stating how his role as FinTech envoy role has to date had a focus on the north. He then stated how the chancellor has recently announced three more fintech envoys – the newest being the CEO of CYBG, David Duffy, which is good news for Yorkshire in particular as the region continues to grow its FinTech presence.

Chris’ keynote topic for the day was The Social Value of FinTech. He used a definition by Sam Ghiatti to frame his talk:

FinTech is an R&D function of financial services in the digital age… less to do with tech more to do with business model reinvention and customer centric design.”

Chris then went through the different areas FinTech is generating a tangible social benefit in the UK. Firstly, from a macro perspective, Fintech supports GDP and economic growth as a growth sector spurring further investment across wide contexts.

Secondly, FinTech allows for the creation of new products such as Initial Coin Offerings (ICOs).

Usually we see finance and investment in the worlds of debt and/or equity – ICOs are not in either of these worlds. It is something completely different […] There are no rights, you get no ownership, but you do get liquidity, and that is important – Chris Sier, Fintech Envoy (England).

Chris also identified how crowdfunding has been spear headed by the FinTech sector and opened up an important market and tool for supporting business growth in the UK.

Thirdly, FinTech is allowing for secure digital identification. Chris spoke about how Estonia is leading the way in e-citizenship and digital IDs. Further, digital profiles are allowing for further connectedness and scalable intimacy. Chris then spoke about how the advancements in machine learning and AI are growing the robo-advice market by collecting and compiling data and making informed recommendations.

Fourthly, Chris identified how fintech reduces and replaces multiple layers of intermediation and inefficiency in transactions, through technologies such as distributed ledger. As an example, he looked into the ISA market and identified how there can be up to 16 layers of intermediation from consumer to end process (with each layer taking a margin). He went onto to highlight how FinTech will also play a key role in the savings industry – particularly in pensions through reducing inefficiencies.

Chris ended with the powerful point that, “saving an entire generation of under-saved from poverty in old age, is probably the largest social impact FinTech will have in the UK”.

Dr Iain Clacher, University of Leeds

Iain Clacher was up next to speak on The Future of Retirement Savings, a topic within which he has conducted extensive research work over recent years and has previously spoken about at FinTech North events.

He began his talk on how there has been a huge shift over the last few decades around where responsibility for pensions sits in society.

We have put the burden of retirement savings onto the individual. As we did this we got rid of the corporate/governmental responsibility and liability. This has led to a catastrophic reduction in savings – Iain Clacher, University of Leeds.

When talking about risk sharing, benefits, and contributions, pensions as currently structured are inter-generational warfare. We need a whole new way to think about pensions. We don’t need evolution, we need revolution.. – Dr Iain Clacher, University of Leeds.

Iain then moved onto the tangible solutions FinTech, and more specifically blockchain is bringing to this sector. Smart contracts can allow for smoother and more efficient schemes that allows for schemes that flex and track consumer savings accordingly at a large scale

David Hogg, Professor of Artificial Intelligence, University of Leeds 

Professor David Hogg, was next up to speak on his specialist topic of artificial intelligence, and began by highlighting the large potential in AI that has been recognised by various industry leaders.

He quoted a 2017 Accenture report that stated, “AI could add $814bn to the UK economy by 2035.”

David then went onto identify reasons behind growth in AI:

Firstly, the growing sources of data – increasing amounts of information requires smart machines to compile and analyse this data in the right way.

Secondly, deep learning – this is machines being able to learn from their own experience and not being reliant on hard programming for every function.

Thirdly, visual recognition – the ability for machines to understand and define visuals is also an important driver of the AI sector. David provided an interesting cases study project of having a machine watch and learn the facial expressions seen in TV shows to then predict what someone might be saying based purely of their expression and lip movement.

A trained lip reader will get it right 20% of the time, our program gets it right 50% of the time. So we are already seeing significant advances in AI – David Hogg, University of Leeds

David also spoke about how there is still a long way to go on how machines understand the world around us.

Just because you can recognise objects in an image, this doesn’t mean you can understand what is going on or the context around it. –  David Hogg, University of Leeds

Panel Discussion

After a networking break, attendees gathered again to engage in interactive Q&A with a panel of industry leaders made up of the event’s keynote speakers as well as:

–  Kristen Hirst, Vice Consul, Professional & Financial Services, DIT (Atlanta)

–  Paul Anderson, Partner, Squire Patton Boggs

–  Stuart Sherman, CEO, IMC

–  Nick Harrison, Commercial Director, First Direct

–  Julian Wells, Director, Fintech North & Whitecap Consulting

Various topics were discussed such as the opportunity for misuse of AI. There are clear challenges in that people can use AI such as fraud. Although this cannot be prevented completely, there are developments in AI that are being used to develop added layers of monitoring and security. The panel explained how there is a symmetry in tech development, that for each use of bad there is a use of good as well and that these tech developments and advances play off of each other.

When discussing ICOs, the panel highlighted how financial transparency is needed between the investors and the issuing firms as the asset bought/traded is a crypto asset and does not carry the same shareholder compliance or due diligence that traditional equity does – this allows the issuing ICO firms to be less transparent about their capital assets.

When discussing innovation on a national level, Kristen Hirst shared her observations from a US perspective, and identified how the UK has chosen an effective strategy involving regulatory bodies and innovation. The FCA has played a more proactive role in spurring innovation in traditional sectors such as financial services. This contrasts to the USA where regulatory bodies have not been as effective. Kristen noted how there are 14 major regulators with other regulatory bodies underneath them, then this is divided across 52 states, making for a complex network of regulatory infrastructure that is less effective.

Collaboration between higher education and industry was a recurring theme of the event. The panel identified that corporates were in fact open to working more closely with universities and that universities have important resources in R&D that can support innovation. Some of the identified challenges to overcome in this area was: the amount of investment available for collaborative innovation projects, business model and operational issues as well as more endemic issues about the roles universities play as traditional research-only institutions.

Adam Beaumont, CEO, aql

Adam Beaumont was next up for a keynote speech. He began his talk by providing a brief summary of NorthInvest, which was set up in 2015 and connects entrepreneurs to angel investors with a focus on the northern powerhouse.

Adam then introduced his core business, aql – a leading data centre and telecoms firm based in Leeds, which has also been home to FinTech North’s annual conference since it launched. He moved onto the important aspects of trust and security in transactions and the role cyber security plays in maintaining trust in transactions. Adam also explained to the audience that digital currencies were now able to provide the common method for value exchange that can replace the role cash has previously played in the exchange of goods and services.

On cryptocurrencies, he stated:

We are starting to see nice halfway house ideas now in digital currency that are between centralised traditional currencies, and completely decentralised blockchain currenciesthese are more attractive to banks as they can get involved much easier. Adam Beaumont, CEO, aql.

Latin American – Fintech Showcase

The event then moved into the FinTech North international showcase, supported by Department for International Trade. Attendees heard from 4 FinTech start-ups from the Latin American who each had the opportunity to briefly pitch their proposition to the audience:

–  Bitcointoyou – provides a bitcoin wallet allowing international payments

–  Eye Capital – provides artificial intelligence capability to serve portfolio investors

–  Tesseract MX – a cyber security firm based in Mexico City

–  Vtronix Smart – a technology firm using facial recognition technology to prevent crime

Prior to the commencement of a vibrant networking lunch, Julian Wells closed the formal agenda by thanking the University of Leeds, Leeds CiTy Council, and Squire Patton Boggs, and reminding guests to book their places at the Fintech North Leeds conference on the 26th April.

Sign up here for FinTech North Leeds 2018

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