Fintech Friday – fintech news round-up of the week
28 April 2017
Notable fintech news this week includes the FCA warning that City’s cybersecurity credentials badly need beefing up
US fintech outlook muddied by row over regulatory standards
The future of American fintech is at risk thanks to a pitched battle that has opened up between the states and Washington over regulatory standards, according to a Techcrunch report.
The disagreement centers around a proposal made in December by the Office of the Comptroller of the Currency (OCC). The proposal aims to enable fintech companies to apply for charters that would qualify them as “special purpose national banks”. As such they would be subject to minimum requirements around governance structure, capital, liquidity, compliance, financial inclusion and continuity strategy.
The charter is meant to provide companies with a stamp of approval from the OCC for having generally strong compliance practices, in turn enabling Washington (with an eye on the interests of the consumer) to separate the well-run, “safe” fintech businesses from the shady, exploitative ones. But, as it turns out, the well-meaning proposal has instead come under fierce attack from a host of state regulators who view the move as a broad overreach of federal authority.
Barclays on the Rise
Barclays is about to open in London what it claims will be Europe’s largest co-working space dedicated to fintech, reports The Memo.
More than 40 companies will be housed across the vast 30,000 sq ft of workspace, spread over seven floors, with four balconies and two mezzanines. This facility, located in Shoreditch, is the latest initiative to emerge from Barclay’s global Rise programme.
Rise is Barclays’ fintech innovation arm and currently boasts seven Rise workspaces around the world in cities like New York, Mumbai and Tel Aviv, where it hosts a business accelerator in partnership with Techstars and offers co-working space for small fintechs.
Back to school for City’s cyber detectives
Cybersecurity is one the top concerns of financials globally but as far as the UK’s Financial Conduct Authority is concerned, City of London firms are struggling to master even the basics on this front and lack skilled professionals to help them fix the problem.
The FCA’s warning, reported by Financial News, has been issued by Nausicaa Delfas, the watchdog’s acting chief operating officer who previously led its approach to IT and cyber resilience.
Outlining the cyber threats to financial services firms she says: "We have witnessed some interesting changes over the last 12 months, with the re-emergence of some old foes (such as ransomware) and the development of some innovative and dangerous criminal networks."
Financial services firms need to have "good detective capabilities" and the ability to recover and respond. But she adds the regulator's work "has shown us that firms continue to struggle to get the basics right".
She points to the 2016 Verizon Data Breach Investigations Report, which analysed 2,260 breaches and 64,199 security incidents across 61 countries. It found that just 10 vulnerabilities accounted for 85% of security breaches. In most cases, Delfas notes, these were well-known and had fixes available at the time of attack.
"Tools to enable effective management of vulnerabilities are well established, and yet organisations either don’t use them, or don’t use them effectively," she says.