The UK Financial Conduct Authority (FCA) has posted the 29 firms that will be part of the fourth cohort of the Fintech sandbox.
The UK was the trailblazing regulatory agency that first created an environment where innovative financial firms could safely experiment with new services without running afoul of existing rules and with the guidance of the regulator. Since the UK Fintech Sandbox launched many international financial regulators have followed suit creating their own, similar Sanbox ecosystem.
The FCA has a strategic objective of ensuring the relevant markets function well. To support this, it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
Since 2014, the UK Fintech Sandbox has seen over 1,200 applications and has supported more than 500 firms. This round saw 69 applications – an increase on the number of applications to cohort three.
“Cohort 4 has seen a large increase in the number of firms testing wholesale propositions including firms that are aiming to increase the efficiency of the capital-raising process. Alongside these we can see significant use of distributed ledger technology (DLT), some experimentation with cryptoassets which will help inform our policy work and propositions aimed at helping lower income consumers.”
The FCA said that Cohort 4 has eight firms (27%) in the wholesale sector. Five large firm tests will be conducted in cohort 4; the largest number to date.
Over 40% of companies accepted to cohort four are using blockchain of DLT. Of these, six are using DLT to automate the issuance of debt or equity. Two are using DLT to support the provision of insurance. Other technology applied includes geo-location technology, use of Application Programming Interfaces (APIs) and artificial intelligence.
The FCA pointed to the fact they have accepted a number of firms that will be testing propositions relating to crypto-assets. The agency said they are “keen to explore whether, in a controlled environment, consumer benefits can be delivered while effectively managing the associated risks.”
The current cohort is listed below with one firm requesting to remain anonymous. The application window for cohort 5 of the regulatory sandbox will open later this year.
Cohort 4 firms
BlockEx – Platform that facilitates the issuance and manages the lifecycle of regulated bonds using DLT.
Capexmove – DLT-based solution for issuing tokenised debt. Capexmove uses smart contracts to make debt financing more efficient.
Chasing Returns – Psychology based risk platform that promotes good money management discipline and improves outcomes for customers that trade Contracts for Difference (CfDs). It acts like a digital coach, encouraging adherence to money management and risk exposure levels.
Community First Credit Union – Initiative to facilitate creation of an identity token that supports customers who lack traditional forms of ID, in order to assist them in accessing bank account services in the UK.
Creativity Software – Regtech solution that supports regulated activities in the UK to achieve more secure customer authentication via mobile phone network based geolocation services. The intention is to draw on geolocation technology to protect UK bank customers from fraud and crime.
CreditSCRIPT – Investment platform that gives professional and institutional investors access to a wide range of online lending markets through a single access point. Investors will be able to gain exposure to consumer, SME and real estate loans via CreditSCRIPT.
Dashly – Fully autonomous, ‘always-on’ mortgage advice platform that continuously tracks and compares a borrower’s existing mortgage, alerting them the moment it pays to switch.
Etherisc – Service that uses smart contracts on a blockchain to provide fully automated, decentralised flight delay insurance.
Fineqia – Blockchain based digital platform that enables companies to issue and administer debt and equity securities, including bonds backed by cryptoassets.
Fractal – Insights platform using distributed ledger and artificial intelligence technology to power SME financing by digitising credit applications and connecting loan issuances to the underlying financial data.
Globacap – Capital raising platform for SMEs and institutional investors which facilitates the issuance process of debt and equity securities. Globacap use DLT to simplify and streamline the issuance process.
Hub85 – Fully-automated governance solution that enables financial institutions to monitor and understand how spreadsheets are used for regulated activities. The software monitors and enforces compliance rules, identifies structural file errors and quantifies enterprise risks. Analytics captured can be used to identify and expedite the automation of operational tasks.
London Media Exchange – Platform that facilitates the buying and selling of contracts for digital advertising space. In the short term this will improve transparency for market participants, and in the long term will lead to the development of derivatives.
Meet Mia – Chatbot on Facebook Messenger that allows customers to buy and manage travel insurance. Policies are written in plain English and customers can ‘ask’ the chatbot what they are covered for. Group discounts and automated claims handling will also be available.
Mettle – Current account which helps small business owners make decisions, with forward looking finances, smart invoices and easy receipts.
Mortgage Kart – Automated-advice offering to help customers pick the most suitable mortgage given their needs and circumstances.
Multiply – Service that combines financial modelling and machine learning to provide holistic financial plans with specific product recommendations directly to consumers.
Natwest – Governance model based on DLT that enables organisations to work collaboratively on developing and running decentralised applications. The model codifies society rules in smart contracts on a blockchain creating a digital mutual. NatWest will open source the code after successful testing.
NorthRow – Service that enhances KYC, client onboarding and monitoring processes using account data to support identity verification and financial suitability.
Salary Finance – Payroll linked lending platform which provides consumers with access to their earned income by the day or week. By enabling employees to access their earned income more frequently, they will be better able to manage their budget, address unexpected needs or avoid ‘late payment fees’ of existing commitments.
Token Market –Funding platform that uses DLT to facilitate the issuance of shares in private companies more efficiently.
Tokencard – Service that connects a centralised payment card to a decentralised blockchain. Consumers hold their own assets in a decentralised Smart Contract wallet and top up their card through simple exchange.
Universal Tokens – Service that leverages blockchain technology in the distribution of insurance products to increase trust and improve user experience.
Veridu Labs – Privacy-driven KYC and AML solution backed by machine learning and network analyses to facilitate onboarding and access to business banking.
World Reserve Trust – Service that facilitates cheaper and faster global trade payments and settlement using the Sīlùbì, an asset-linked smart token that utilises a permissioned DLT network.
Zippen – Service that enables individuals to transfer and consolidate (hence ‘zip’) their pensions (‘zip-pen’) all in one place, delivering convenience, financial advantage or both.
1825 (part of the Standard Life group) – Automated advice proposition for consumers that are close to retirement. Plans are generated by an automated advice engine that considers how to meet the needs and aspirations of consumers using their available liquid and illiquid assets.
20|30 – DLT-based platform that allows companies to raise capital in a more efficient and streamlined way. The test will be facilitated in conjunction with the London Stock Exchange Group ad Nivaura.