Fintech bridge agreements are described as “a bespoke agreement outlining collaboration between two governments, cooperation between regulatory bodies and connectivity between ecosystems that encourages the sharing of information, including emerging trends and regulatory issues, with counterparts and discussions around areas of best practice”.
Russ Shaw, Tech London Advocates
Because the UK and Singapore signed the primary settlement in May 2016, comparable preparations have been made with regulators in Australia, Canada, China, Hong Kong, Japan, Korea, Singapore and the US.
In accordance with Russ Shaw, founding father of Tech London Advocates, these bridges are a possibility for UK fintechs to entry progress capital and sizeable markets in different international locations.
Nevertheless, he acknowledges that the important thing to their success can be making certain there’s a concentrate on producing particular industrial commitments that yield tangible outcomes.
“So far, the most effective bridge for the UK has been with Singapore, which has brought a number of fintech entrepreneurs to London,” he says.
This highlights a priority amongst some market members that such agreements are typically extra worthwhile to much less developed fintech markets.
“Entrepreneurs in the likes of Singapore, Tokyo and Shanghai have a real appetite to expand globally and establish commercial relationships with global tech hubs and London is high on this list given its status as a global fintech capital,” says Shaw.
“Given this, the inherent risk of the bridges is that they work in one direction.”
Innovate Finance’s worldwide technique lead Peter Cunnane says the UK’s settlement with Australia has allowed the 2 international locations to share experience in areas reminiscent of open banking, which was subsequently efficiently launched in each markets.
Peter Cunnane, Innovate Finance
“Undoubtedly, less developed fintech markets look to the UK for thought leadership,” he says.
“This can be seen through the creation of domestic regulatory sandboxes around the world, following the UK example. However, the agreements also generate opportunities for UK businesses to provide expertise and investment into overseas markets.”
On paper, fintech bridge agreements make it simpler for UK companies to function in abroad markets, and with Brexit on the horizon it’s hardly stunning that the federal government is eager to advertise ties with main commonwealth states reminiscent of Canada, Australia, Singapore and India.
Nevertheless, there’s a sense that many of those agreements have been underutilized and that UK fintechs are lacking out on a number of the advantages because of this.
That’s the view of William Samengo-Turner, a companion at legislation agency Allen & Overy, who says the UK has a classy regulator that has spent quite a lot of effort and time understanding the merchandise and constructions UK fintechs have sought to deliver to market.
These companies take pleasure in a deep pool of funding capital and a community of assist from skilled advisers.
We see different regulators seeking to the UK for steering in the case of assessing their very own regulatory requirements and it’s straightforward to see the potential for the UK to develop vital smooth energy on this space
– William Samengo-Turner, Allen & Overy
If a UK licence have been to change into a global ‘gold standard’ it could be useful to UK fintechs seeking to increase into new markets. It might seemingly even be useful for such companies in the case of validating their enterprise models and in search of funding.
“These agreements have the potential to influence international regulatory standards to the benefit of UK fintechs,” says Samengo-Turner. “We see other regulators looking to the UK for guidance when it comes to assessing their own regulatory standards and it is easy to see the potential for the UK to develop significant soft power in this area.”
William Samengo-Turner, Allen & Overy
Nevertheless, this must be balanced in opposition to the challenges of an more and more fractious geopolitical scenario and native regulators with opposing views on sure applied sciences, as evidenced in China’s therapy of cryptocurrency.
One UK fintech that has benefitted is enterprise lending platform Commerce Ledger. In April 2019, the corporate grew to become the primary world expertise platform to take part in each the UK-Australia and UK-Hong Kong bridges.
“The UK-Hong Kong connection has opened up new avenues of support to help us continue to build the network of organizations that can benefit from open banking,” explains Commerce Ledger CEO, Martin McCann.
“Building a network is crucial to our success in uniting the cash management and lending community.”
The corporate doubled its buyer base final 12 months and is now working with one in all Australia’s largest enterprise finance companies and restructuring the receivables finance onboarding processes of one of many world’s largest commerce finance banks.
“In addition, having tested our platform within one of our global clients in Hong Kong we are now embarking on a 20-country deployment,” provides McCann.