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Regulators in the U.K. and Canada have signed an agreement that will assist FinTech companies, making it easier for them to expand into each other’s markets.
In a report from Insurance Journal, the agreement between the U.K. Financial Conduct Authority (FCA) and the Ontario Securities Commission (OSC) is aimed at helping financial technology firms work with regulations.
The FCA and the OSC already have the own FinTech programs in place designed to help startup companies meet the requirements necessary and to test products under their guidance.
In November, the FCA announced the first 24 companies that will be taking part in its regulatory sandbox. It is hoped that those taking part will help to boost London’s FinTech scene particularly at a time when the country’s capital is experiencing pressure in light of the Brexit result.
So much so, that venture capital funding in the U.K. dropped by 33 percent to $783 million in 2016 compared to $1.2 billion in 2015. This was largely attributed to the uncertainty circulating Brexit in addition to geo political and macro economic factors.
Despite the challenges, though, it continues to reign at the top and this agreement with Canada will do much to further boost London’s FinTech sector.
This can be seen by the fact that venture capital funding in Canada was reported to have reached an all-time high in 2016 in twenty years as the U.S. FinTech market experienced a slowdown. According to PitchBook, funding in Canada reached $137.7 million last year compared to $21.8 million five years ago, and $7.3 million in 2000.
Concern from Banks
However, as the financial technology sector continues to expand, central banks have voiced their concerns regarding FinTech. They believe that the industry’s expansion is a threat to financial stability.
The Bundesbank President, Jens Weidmann, expressed his views on FinTech stating that because of its threat to the banking sector it requires more regulatory oversight.
While former Group CEO of Barclays, Antony Jenkins, predicted a future within the next ten years where FinTech would disrupt traditional banking systems.
And yet, by simply working together the two industries will find that they can deliver benefits to each other that will help them to expand.
In the meantime, though, this agreement between the U.K. and Canada will assist many startups helping them to overcome complicated regulations, enabling them to grow on the services that they will be able to provide.
Featured image from Shutterstock.