On 29 April, Christopher Woolard, FCA Executive Director for Strategy and Competition, gave a presentation on innovation.
He talked about the impact of the FCA’s work to promote innovation, and how the regulator aims to continue encouraging innovative approaches.
We summarise his speech and look at the implications for financial services marketing.
What has the FCA been doing on innovation?
Five years ago, the regulator launched its Innovate programme. At the start, as Woolard says, this was a project staffed by just two people. Today, there is a complete Innovation division within the Authority.
As part of this programme, the regulator set up its Regulatory Sandbox– a testbed for new solutions and products – and most recently, its Global Financial Innovation Network, a group of regulators working together to test new approaches internationally.
Has it been working?
In a world obsessed by ROI, Marketers are likely to ask what impact these projects and programmes have had on innovation. Have they delivered progress?
This is something Woolard covers in his talk, saying: ‘We all agree that innovation in the interests of consumers is a good thing. It’s a subject that attracts great attention…But are we achieving it?’
The over-arching aim of Project Innovate was – in Woolard’s words – to ‘encourage innovation in the interest of consumers’. This consumer-focused approach is key in a world where customers are driving disruption across finance and other sectors. Increasingly, established financial services brands are realising that you don’t have to be a start-up to be a disruptor.
In his presentation, he points to some key metrics that suggest the FCA’s approach is making a difference:
- Firms that have gone through the Innovate programme have brought products and services to market 40% quicker than equivalent financial services firms
- The regulator’s innovation work has helped over 700 firms in total
- 80% of the 47 firms that have completed Sandbox testing are now operating in the market
- The number of ‘major’ firms using the FCA’s Innovate services is growing as innovative start-ups drive established firms to up their game. Woolard says that ‘we have seen the entry of smaller firms prompt larger players to introduce their own innovative services’
- The Innovate programme has received over 1500 requests for assistance since launch – equivalent to nearly one a day
- The Global Financial Innovation Network, launched last year, has grown from 12 founding members to a network of 35 organisations across international markets
How can you capitalise on innovation?
If you want to explore or exploit new routes to market, there are some key actions:
- Balance innovation and compliance
The FCA aims to help innovative firms ‘operate in a regulatory context, getting products to market faster’. This is a key point. Firms need to promote and sell their solutions quickly to keep a step ahead of their competitors. But they have to do this in a compliant way.
If this is a challenge you’re facing, these tips on marrying innovation with compliance should help.
- Focus innovation on consumer benefit
The regulator aims to drive innovative approaches ‘in the interest of consumers’. If your own projects are customer-oriented and your promotion of them focused on the FCA’s aim of being clear, fair and not misleading, they stand a better chance of meeting the regulator’s requirements.
- Reduce your risk when innovating
If you want to exploit innovative opportunities in financial services, you need to ensure you’re not risking regulatory breaches, or threats to your commercial or operational abilities.
- Explore the innovations that can help you
Innovation isn’t just for the benefit of consumers. There are also innovations that can support Marketing and Compliance teams in producing and approving financial promotions. Automated solutions can enable you to design, produce and deliver streamlined, personalised communications without compromising compliance.
If you’re a regulated business, these tips on how to innovate in a compliant way will help you make the most of digital while keeping on the right side of the FCA.
Innovate in a compliant way to get ahead
You can read the full text of Christopher Woolard’s speech on the FCA website, along with a number of other updates on innovation progress, including an evaluation report assessing the effectiveness of the regulator’s Innovate services and an announcement on the fifth cohort of firms to take part in the Regulatory Sandbox.
How can we help?