CITY regulator the Financial Conduct Authority (FCA) is to work with its counterpart in Japan to support innovative companies in the burgeoning FinTech – financial technology – sector.
The Financial Services Agency of Japan (JFSA) have exchanged letters on a co-operation framework that will provide a regulatory referral system for innovator businesses from the two countries who are seeking to enter the other’s market.
Under the agreement, once an authority receives an “innovator business referral” it will offer support by reducing any regulatory uncertainty and time to market.
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In addition, the exchange of letters will encourage the regulators to share information about financial services innovation in their respective markets, as well as reducing barriers to entry in a new jurisdiction and further encouraging innovation in both countries.
In the UK, the FCA has an overarching statutory objective as a regulator to make financial services markets work well, and promoting competition through innovation forms a significant part of this.
The exchange of letters will provide invaluable knowledge to UK firms hoping to enter the Japanese market and will assist non-UK innovators interested in entering the market overseen by the FCA.
For Japan, the agreement will encourage Japanese start-up companies to engage with innovative financial businesses globally and will attract UK companies to the Japanese market and contribute to stimulating the economy.
Christopher Woolard, the FCA’s executive director of strategy and competition, said: “We are committed to encouraging innovation that has the potential to be of benefit to consumers using financial services here in the UK.
“Today’s exchange of letters with the JFSA will help break down barriers to entry both in Japan and in the UK for firms with interesting new business services and products.”
Shunsuke Shirakawa, vice commissioner for international affairs at the JFSA, added: “We are delighted to establish this co-operation framework with the FCA.
“This is our first case in creating a pro-FinTech co-operation framework with any other countries. The UK is one of the world-leading FinTech countries, generating £6.6 billion in revenue. We believe that this exchange of letters strengthens the relationship between the JFSA and the FCA and promotes innovation in our respective markets.”
FinTech covers innovation across financial services, including e-banking, payment technologies, crowdfunding and digital – or crypto – currencies like bitcoin and Scotland is seen as a leader in the field.
More than 100,000 work in the digital technology sector here with 86,000 in financial services. Edinburgh is the biggest financial services sector outside London, and Scotland has world-class academic centres of excellence, providing expertise and resources in cyber security and big data analytics. FinTech brings the two fields together.
Yesterday’s announcement comes ahead of the launch in May of Scotland’s first FinTech business accelerator. The new hub will operate from an entrepreneurial centre set up the Royal Bank of Scotland’s Edinburgh headquarters last year. It is being back by the Scottish and UK governments and will offer free space and advice to FinTech entrepreneurs, with the aim of becoming a centre of excellence for the sector.