Name: Fintech Insights - Future of Finance in the UK
Uploaded: 2024-08-07T11:04:37.226Z
Duration: 934.7
Description: Fintech Insights explores the future of finance in the UK with Lord Chris Holmes, Peer at House of Lords during the Centre Stage.

Fintech Insights - Future of Finance in the UK.mp4

Fintech Insights - Future of Finance in the UK.vtt

ENGLISH

{{00:00:00}}
I

{{00:00:12}}
think we have a real opportunity in the
UK and reaching out right around the world

{{00:00:19}}
when it comes to these new technologies,
AI, blockchain, internet of things, cyber.

{{00:00:27}}
A real opportunity because we
have such phenomenal technology

{{00:00:31}}
companies, startups, scale ups.

{{00:00:34}}
We have a great finance ecosystem
and we have the great good

{{00:00:38}}
fortune of English common law.

{{00:00:40}}
When you put all those together, you
can see some of the ways that AI and

{{00:00:46}}
blockchain particularly are likely to, and
in fact, must positively impact finance.

{{00:00:55}}
AI, if we take a consumer lens, a
financial institution lens, or a

{{00:01:02}}
national lens, we can see benefits.

{{00:01:05}}
For the customer, a real opportunity
to drive something which is worthy

{{00:01:10}}
of the name personalization.

{{00:01:12}}
To have that ability to drive
product and possibilities in

{{00:01:18}}
real time to your customers.

{{00:01:22}}
For the institution, to drive
efficiency, effectiveness.

{{00:01:28}}
New lines of liquidity through the
adoption of these technologies and

{{00:01:33}}
at a national level to get after some
of the most pernicious problems that

{{00:01:37}}
have not just dogged finance, but have
dogged our nation and the globe for

{{00:01:42}}
decades, not least fraud, where we're
currently experiencing an epidemic.

{{00:01:47}}
If we look how AI can help to eradicate
fraud, not least through pattern spotting,

{{00:01:56}}
Being able to effectively identify,
there you can see such possibilities

{{00:02:02}}
and each of the technologies are
extraordinary of themselves, but the

{{00:02:06}}
ultimate opportunity is when we look at
them in combination with one another.

{{00:02:11}}
If we so choose, a phenomenal
opportunity, but it's about crafting

{{00:02:16}}
that narrative, that vision, that
real sense of mission around human led

{{00:02:22}}
technologies for public, for private.

{{00:02:26}}
for economic, for social,
for psychological good.

{{00:02:37}}
The reason why I did my report into
distributed ledger technology in 2017 was

{{00:02:43}}
because I saw the array of opportunities
that the technologies had and my fear

{{00:02:51}}
was that they wouldn't be realized for
want of the knowledge of the technologies

{{00:02:57}}
but also the potential fear and the over
connection with just seeing blockchain

{{00:03:03}}
and Bitcoin as the same thing, which
of course they fundamentally aren't.

{{00:03:08}}
Since conducting the report there's
been some really impressive proofs of

{{00:03:14}}
concept and deployment of the technology,
one for example in supply chain.

{{00:03:18}}
Supply chain's notoriously opaque,
even trying to go one or two steps

{{00:03:22}}
back in a supply chain, but with
blockchain underpinning technology

{{00:03:27}}
to be able to combine in real time.

{{00:03:29}}
The physical goods, the finance,
the legal documentation, custom

{{00:03:35}}
documentation, all of that connects in
real time because of this new technology.

{{00:03:40}}
We did a fabulous proof of concept
with the UK Australia wine trade and

{{00:03:46}}
we had all of the detail from the soil
that the vines were growing in South

{{00:03:52}}
Australia, right through to the first
consignment landing on our desk in London.

{{00:03:59}}
Everything.

{{00:04:00}}
Transparent, everything trusted
in real time right the way

{{00:04:04}}
through that supply chain.

{{00:04:06}}
We could transform borders, a
really hot issue at the moment.

{{00:04:11}}
The technologies could transform so
many of the issues around our borders

{{00:04:16}}
through being able to reimagine what
we mean in how a border can work.

{{00:04:20}}
And in finance specifically, the
opportunity to transform capital

{{00:04:26}}
markets, transform commodities
markets, London Metal Exchange, to

{{00:04:31}}
transform the FTSE itself through
these underpinning technologies.

{{00:04:37}}
When we did the Financial Services and
Markets Act last year, that was six

{{00:04:41}}
months of my life that I put into that,
bringing into concepts such as the

{{00:04:46}}
Financial Market Infrastructure Sandbox.

{{00:04:48}}
So understanding these technologies, but
providing a clear, safe, secure regulatory

{{00:04:56}}
environment in which to experiment and
develop these technologies, These are

{{00:05:00}}
the opportunities that we have in the UK.

{{00:05:04}}
We demonstrated what was possible
with sandbox technology, with the

{{00:05:09}}
FinTech regulatory sandbox in 2016.

{{00:05:11}}
Measure of success, replicates in well
over 50 jurisdictions around the world.

{{00:05:16}}
So we know how to do this,
we know how to innovate.

{{00:05:20}}
But we need to commit to it, collaborate
across the country, internationally

{{00:05:25}}
with all of our partners, and then you
can really see how these technologies

{{00:05:30}}
can be the bedrock, human led, to drive
growth, to drive value for all citizens.

{{00:05:36}}
It

{{00:05:45}}
was a tremendous honour to be part of
the preparation of the Khalifa Review.

{{00:05:50}}
It was a great piece of work.

{{00:05:52}}
Let's take a number of policy areas
that we need to push forward on.

{{00:05:57}}
Let's look at funding, let's
look at education, let's look

{{00:06:00}}
at the regulator and regulation.

{{00:06:02}}
Funding, we need to understand the
ecosystem required to fund a start

{{00:06:08}}
up, crucially at scale up, and then
through to potential IPO and sale.

{{00:06:14}}
We have deep capital markets
in London and in the UK.

{{00:06:21}}
We need to further understand
where sources of funding can come.

{{00:06:27}}
to fuel this FinTech transformation that
we're capable of achieving in the UK.

{{00:06:32}}
How is it that we know, for example,
about the Ontario teachers, through

{{00:06:37}}
their pension fund investing around
the world, but most people wouldn't

{{00:06:41}}
necessarily know about the LGPS, the local
government pension scheme in this country.

{{00:06:46}}
Other sources of funding
that can be brought to bear.

{{00:06:49}}
Education to completely, in my
view, transform the curriculum for

{{00:06:55}}
young people right the way through.

{{00:06:57}}
So they're equipped.

{{00:06:58}}
enabled, empowered to consider
all of these opportunities to have

{{00:07:03}}
resilience and character education
and similarly to educate people

{{00:07:09}}
professionally across this country
as to the opportunities in FinTech.

{{00:07:14}}
Regulator and regulation, we
need to have that innovative

{{00:07:19}}
spirit through our regulators.

{{00:07:21}}
The sort of thing that we saw back
in 2016 when we did the FinTech

{{00:07:25}}
Regulatory Sandbox, the regulator
has a key a crucial part of the

{{00:07:31}}
journey, a crucial role to play.

{{00:07:35}}
It's why last year, again, we
introduced amendments to the

{{00:07:38}}
Financial Services and Markets Act
to bring in a secondary objective

{{00:07:43}}
for international competitiveness.

{{00:07:45}}
And that's the way to understand
that by having competitiveness as

{{00:07:51}}
a regulatory objective, that in
no sense cuts across the need for

{{00:07:56}}
consumer, for customer protection.

{{00:07:59}}
If we want effective regulation, then
it's got to be pro innovation, pro

{{00:08:04}}
citizen rights, pro consumer protection.

{{00:08:07}}
And not only is that desirable,
that's how we must go about

{{00:08:10}}
constructing legislation, regulation,
and the role of our regulators.

{{00:08:14}}
So funding, education, the role of our
regulators and regulation, and finally,

{{00:08:19}}
the quality of the welcome to businesses,
to key talent, to have a one stop shop.

{{00:08:27}}
within government, where it can be laid
out, everything that people want to know

{{00:08:31}}
about coming to start up, to be part
of a FinTech business in this country.

{{00:08:36}}
And that's every last detail in
terms of towns, cities, the education

{{00:08:42}}
opportunities, everything that you'd
want to know if you're thinking of

{{00:08:45}}
coming to base your life, to base
your business in the United Kingdom.

{{00:08:58}}
We have a real opportunity
in the UK to lead.

{{00:09:03}}
with the opportunities from
these new technologies whilst

{{00:09:07}}
understanding and legislating for
their challenges and their risks.

{{00:09:13}}
It was a great privilege to be
one of the people leading the

{{00:09:18}}
Electronic Trade Document Bill, now
Act, through Parliament last year.

{{00:09:22}}
I've variously described it
as the most important piece of

{{00:09:25}}
legislation no one has ever heard of.

{{00:09:28}}
Why I say that is because it's
the first time the UK, potentially

{{00:09:33}}
any nation, has legislated for the
opportunities of these new technologies.

{{00:09:38}}
Why is it so significant?

{{00:09:40}}
Because until we had these new
technologies, such as blockchain, you

{{00:09:46}}
couldn't have electronic trade documents.

{{00:09:48}}
Now people might go, that's crazy.

{{00:09:50}}
We've had smart contracts for years.

{{00:09:51}}
What are you talking about?

{{00:09:52}}
But the whole point is because trade
documents are possessive in nature, i.

{{00:09:56}}
e.

{{00:09:57}}
you hold the paper, you hold the
goods, the technology needed to exist.

{{00:10:02}}
to be able to clearly identify
that if you held that electronic

{{00:10:06}}
document, no one else held it, and
you could pass it to perfect transfer.

{{00:10:12}}
And once you passed it, no one
else held it at that point.

{{00:10:15}}
So by doing that, potentially will
transform international trade,

{{00:10:21}}
because currently it takes between
10 to 14 days to perfect transfer.

{{00:10:26}}
This can do it in minutes.

{{00:10:29}}
So that drives economic potential.

{{00:10:31}}
Environmental potential because
of the electronic, if the trade

{{00:10:34}}
document wasn't with the goods, say
the documents in London, somebody

{{00:10:39}}
would have to fly to Singapore to
connect that with the goods there.

{{00:10:41}}
So economic benefit, environmental
benefit, and a drive of extraordinary

{{00:10:46}}
liquidity, both in terms of the trade
itself and in terms of the secondary

{{00:10:51}}
market that can be delivered through the
trade of those financial instruments.

{{00:10:56}}
Similarly, with the AI regulation bill, I.

{{00:11:02}}
believe that we needed to do something
significant in our common law

{{00:11:08}}
jurisdiction in terms of AI regulation.

{{00:11:12}}
The government's position
was largely wait and see.

{{00:11:14}}
Now, I didn't think wait and see was
an ideal route to achieve anything.

{{00:11:20}}
By introducing my AI bill last
November and getting it through

{{00:11:25}}
all of its stages in the House of
Lords, it was looking well set until

{{00:11:30}}
somebody called a general election.

{{00:11:32}}
I will reintroduce it again in this
next session and see how far we get

{{00:11:36}}
with it, because if we're to achieve
the benefits and be cognizant of the

{{00:11:42}}
burdens and the challenges of AI, we need
to put in place the right legislative,

{{00:11:47}}
the right regulatory framework.

{{00:11:49}}
And everything tells me, if you get it
right size regulation is both good for

{{00:11:56}}
innovation and good for inward investment.

{{00:11:59}}
We all know bad regulation,
but that's bad regulation.

{{00:12:02}}
That doesn't mean that regulation is bad.

{{00:12:05}}
Plenty of examples from our recent history
in terms of the CMA9 order, Open Banking.

{{00:12:10}}
We created that in this country.

{{00:12:12}}
We know how to do this.

{{00:12:13}}
We know how to be pro
innovation for regulation.

{{00:12:17}}
We know how to do it for
consumers, for citizen rights.

{{00:12:21}}
That's why I was seeking with
my AI Regulation Bill to have a

{{00:12:24}}
clear, approach in the UK, which
would ripple out through all of the

{{00:12:29}}
connected common law jurisdictions.

{{00:12:31}}
So we're able to benefit for
citizens, benefit for businesses,

{{00:12:36}}
all the opportunities that exist
with artificial intelligence.

{{00:12:48}}
There are extraordinary opportunities
across our financial services sector and

{{00:12:53}}
indeed across the whole of our economy
and society from these new technologies.

{{00:13:00}}
Let's just do it as the
ABC, AI, blockchain, cyber.

{{00:13:05}}
AI can transform organizations.

{{00:13:09}}
The ability for financial services
to abstract away from the tech stack,

{{00:13:14}}
to develop and deliver financial
services wrapped around the customer,

{{00:13:20}}
wrapped around the individual.

{{00:13:22}}
Looking at a complete financial
experience, there's various phrases

{{00:13:28}}
out there which people will know.

{{00:13:29}}
Embedded finance, future finance,
open finance, they all have meaning,

{{00:13:34}}
and rightly what I'd say is Total
Finance, where it's truly customer

{{00:13:42}}
centric, there's a real sense of how
you build the financial opportunities

{{00:13:49}}
around the individual, how you
construct the cluster of APIs.

{{00:13:53}}
around, say, an experience that somebody
is seeking to be able to take on.

{{00:14:01}}
Travel, for example, you build
a cluster of APIs around that.

{{00:14:05}}
And for financial services to realize they
don't have to own the relationship, they

{{00:14:09}}
can be the deliverer of that experience,
to understand banking as a platform,

{{00:14:15}}
banking as a service, and through that,
to develop relationships in a transformed

{{00:14:20}}
way through the human led technologies.

{{00:14:24}}
Similarly, for blockchain, to
transform the efficiency, the

{{00:14:29}}
transparency, the trust within financial
services institutions themselves.

{{00:14:35}}
Take what it could do just in
back office, for one example.

{{00:14:39}}
Take what it could do in terms of
financial markets, market infrastructure,

{{00:14:45}}
new markets developed as a result
of having these technologies.

{{00:14:49}}
Cyber, absolutely critical to all of this.

{{00:14:53}}
As already mentioned, we have
so many difficulties around

{{00:14:56}}
fraud and other difficulties.

{{00:15:00}}
We have a great cyber industry
in the UK that needs to be

{{00:15:05}}
critically part of all of this.

{{00:15:07}}
So huge opportunities.

{{00:15:10}}
As I say, it becomes really interesting
and really effective when we look

{{00:15:14}}
at the technologies in combination,
in concert with one another.

{{00:15:19}}
And that's before we've even said
anything about quantum, another huge

{{00:15:23}}
area for discussion and consideration.

think we have a real opportunity in the
UK and reaching out right around the world

when it comes to these new technologies,
AI, blockchain, internet of things, cyber.

A real opportunity because we
have such phenomenal technology

We have a great finance ecosystem
and we have the great good

When you put all those together, you
can see some of the ways that AI and

blockchain particularly are likely to, and
in fact, must positively impact finance.

AI, if we take a consumer lens, a
financial institution lens, or a

For the customer, a real opportunity
to drive something which is worthy

To have that ability to drive
product and possibilities in

For the institution, to drive
efficiency, effectiveness.

New lines of liquidity through the
adoption of these technologies and

at a national level to get after some
of the most pernicious problems that

have not just dogged finance, but have
dogged our nation and the globe for

decades, not least fraud, where we're
currently experiencing an epidemic.

If we look how AI can help to eradicate
fraud, not least through pattern spotting,

Being able to effectively identify,
there you can see such possibilities

and each of the technologies are
extraordinary of themselves, but the

ultimate opportunity is when we look at
them in combination with one another.

If we so choose, a phenomenal
opportunity, but it's about crafting

that narrative, that vision, that
real sense of mission around human led

for economic, for social,
for psychological good.

The reason why I did my report into
distributed ledger technology in 2017 was

because I saw the array of opportunities
that the technologies had and my fear

was that they wouldn't be realized for
want of the knowledge of the technologies

but also the potential fear and the over
connection with just seeing blockchain

and Bitcoin as the same thing, which
of course they fundamentally aren't.

Since conducting the report there's
been some really impressive proofs of

concept and deployment of the technology,
one for example in supply chain.

Supply chain's notoriously opaque,
even trying to go one or two steps

back in a supply chain, but with
blockchain underpinning technology

The physical goods, the finance,
the legal documentation, custom

documentation, all of that connects in
real time because of this new technology.

We did a fabulous proof of concept
with the UK Australia wine trade and

we had all of the detail from the soil
that the vines were growing in South

Australia, right through to the first
consignment landing on our desk in London.

Transparent, everything trusted
in real time right the way

We could transform borders, a
really hot issue at the moment.

The technologies could transform so
many of the issues around our borders

through being able to reimagine what
we mean in how a border can work.

And in finance specifically, the
opportunity to transform capital

markets, transform commodities
markets, London Metal Exchange, to

transform the FTSE itself through
these underpinning technologies.

When we did the Financial Services and
Markets Act last year, that was six

months of my life that I put into that,
bringing into concepts such as the

So understanding these technologies, but
providing a clear, safe, secure regulatory

environment in which to experiment and
develop these technologies, These are

the opportunities that we have in the UK.

We demonstrated what was possible
with sandbox technology, with the

Measure of success, replicates in well
over 50 jurisdictions around the world.

So we know how to do this,
we know how to innovate.

But we need to commit to it, collaborate
across the country, internationally

with all of our partners, and then you
can really see how these technologies

can be the bedrock, human led, to drive
growth, to drive value for all citizens.

was a tremendous honour to be part of
the preparation of the Khalifa Review.

Let's take a number of policy areas
that we need to push forward on.

Let's look at funding, let's
look at education, let's look

Funding, we need to understand the
ecosystem required to fund a start

up, crucially at scale up, and then
through to potential IPO and sale.

We have deep capital markets
in London and in the UK.

We need to further understand
where sources of funding can come.

to fuel this FinTech transformation that
we're capable of achieving in the UK.

How is it that we know, for example,
about the Ontario teachers, through

their pension fund investing around
the world, but most people wouldn't

necessarily know about the LGPS, the local
government pension scheme in this country.

Other sources of funding
that can be brought to bear.

Education to completely, in my
view, transform the curriculum for

enabled, empowered to consider
all of these opportunities to have

resilience and character education
and similarly to educate people

professionally across this country
as to the opportunities in FinTech.

Regulator and regulation, we
need to have that innovative

The sort of thing that we saw back
in 2016 when we did the FinTech

Regulatory Sandbox, the regulator
has a key a crucial part of the

It's why last year, again, we
introduced amendments to the

Financial Services and Markets Act
to bring in a secondary objective

And that's the way to understand
that by having competitiveness as

a regulatory objective, that in
no sense cuts across the need for

If we want effective regulation, then
it's got to be pro innovation, pro

And not only is that desirable,
that's how we must go about

Fintech Insights

Expert Insight

Fintech Insights explores the future of finance in the UK with Lord Chris Holmes, Peer at House of Lords during the Centre
Stage.