Fintech 2016 Edinburgh

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See Appendix A-1 for Analyst Certification, Important Disclosures and non-US research analyst disclosures

Citi Research is a division of Citigroup Global Markets Inc. (the "Firm"), which does and seeks to do business with companies covered in its research reports. As a result, investors should be

aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

Certain products (not inconsistent with the author’s published research) are available only on Citi's portals.

This presentation was approved for distribution on 3 October 2016; the disclosures in Appendix A1 are current as of the same date.

.

DIGITAL DISRUPTION

03 October 2016

Yafei Tian

Citi Banks Research

[email protected]

+44 (0) 20 7986 4100

How FinTech is Forcing Banking to a Tipping Point

mailto:[email protected]

8

Who Has a Phone?

Source: Citi Research

9

A Long Time Ago

1990

10

Did you Guess Correctly?

1%

11

Leap Frog


Disruption Risks

12

13

Follow the Money

Private Investment in Global FinTech Companies ($bn)

“Silicon Valley is coming. There are hundreds of start-ups

with a lot of brains and money working on various

alternatives to traditional banking.” - Jamie Dimon

FinTech investments have grown exponentially: $19bn in

2015 was up two-thirds from $12bn in 2014. By client

segment, Consumer and SME are the focus (73%). By

product, Marketplace/P2P lending (46%) and Payments

(23%) dominate FinTech dollars invested.

B2C dominates due to changing consumer behaviour, the

smartphone revolution and lower switching costs. Future

investment into B2B could grow.

Source: Citi and CB Insights; Includes first round and subsequent private investments.

0

5

10

15

20

2010 2011 2012 2013 2014 2015

14

Follow the Money

Capital Deployed in Private FinTech Companies By Segment

Capital Deployed in Private FinTech Companies By Business Area

Source: CBInsights, KPMG, Crunch Base and Citi Research; Based on c120 private companies from CBInsights FinTech Periodic table Dec 2014; KPMG’s top 50 most prominent FinTech innovators Dec 2015; Valuation based on Crunch Base Total Equity Funding for private companies and exit value for acquired companies

Personal & SME73%

Asset Management & Wealth10%

Insurance10%

Investment Banking4%

Large Corporate3%

Digital Currency3%

Equity crowdfunding2%

Institutional Tools3%

Lending46%

Money Transfer3%

Payment23%

Savings & Wealth10%

Insurance10%

15

Different is Better than Cheaper

For FinTech Competitive Edge, Different and Capital Light is Key

Not all FinTech new entrants will have a sustainable

competitive advantage. Many FinTech companies may be

better or lower cost than banks rather than different.

Companies that are different rather than having a lower

cost to serve are more likely to maintain their competitive

edge for longer.

Different does not need to be technologically different. It

can be a different target market (iZettle) or a new business

model (Credit Karma or Funding Circle).

A lower cost business model can – for a period of time – be

a form of a differentiation. But lower cost models may get

copied faster by competitors and incumbents.

Banks’ have a natural advantage in capital intensive

products. Most plain vanilla retail and corporate banking is

capital intensive and relatively low cost.

Activities that are capital light (credit scoring, payments,

P2P lending as an agent not principal) are more likely to be

disrupted by new digital business models


Marketplace Lending (Funding Circle)

PoS/ Card Acceptance (iZettle)

Payments (Klarna)

Credit Scoring (Credit Karma)

Lending Platforms (Kabbage)

Corporate Lending

Wholesale Banking

Mortgage Lending

Robo Advisors (NutMeg)

DifferentCheaper

Cap

ital L

ight

Cap

ital I

nten

sive

16

Phones versus Bank Accounts: the EM Opportunity

Mapping the Risk of Digital Disruption

Underdeveloped banking systems. Emerging markets

such as China, India and Philippines have a large

unbanked/underbanked population. Consumer banking is

often underdeveloped in many emerging markets.

High level of smart phone penetration. Some countries

such as China and Malaysia have smart phone penetration

on par with DM counterparts. Others may have fewer smart

phones but a lot of mobile phones eg India, Africa.

Dominant position of technology or telecom giants. Ant

Financial (owner of Alipay) benefits from Alibaba’s e-

commerce ecosystem. Mobile Money’s success in Kenya

is a result of Safaricom’s dominant market share (~70%).

Pragmatic regulatory environment. China had limited

regulation around online payment and P2P lending until

recently. Kenya’s regulatory environment was conducive to

the success of M-Pesa over the past decade.

Policy Matters. Government policy can foster a positive

environment for FinTech growth. See India government’s

J.A.M initiative (Jan Dhan – financial inclusion, Aadhaar –

National Identity Card and Mobile).

Source: Consumer Barometer with Google (smart phone penetration), Company Reports and Citi Research; Retail bank penetration is measured as retail loans% total loans. Size of the bubble is retail bank loans, the larger the bubble, the higher the retail bank loans.

BelgiumNetherlands

Austria

France

Germany

Greece

Spain

Israel

Italy

Sweden

Russia

United Kingdom

USA

Brazil

Mexico

Japan

China

South Korea

Hong Kong

India

Singapore

Malaysia

Philippines

TaiwanThailand

10%

20%

30%

40%

50%

60%

70%

20% 30% 40% 50% 60% 70% 80% 90% 100%

Ret

ail B

anki

ng

Pen

etra

tio

n

Smart Phone Penetration

Innovation Frontier

Ris

k of

losi

ng e

xist

ing

reve

nue

pool

Ris

k of

losi

ng n

ew r

even

ue p

ool

Digital leadersDigital Followers

New Entrants Led Disruptions

Incumbent LedEvolutions

Future GrowthAreas

DigitalFollowers

17

At the Tipping Point in the West, Past the Tipping Point in China

Sub 1% of North America Consumer Banking Revenues are on New Digital Business Model

US (or European) consumer banking is at the early stages

of the disruption cycle. Currently only c1% of North

American consumer banking revenues have migrated to

new digital business models but this could accelerate.

China, led by tech giants such as Alibaba and Tencent, is

well past the tipping point. China’s e-commerce system is

the largest in the world (40% of GMV, 2015). Alipay’s total

payment value in 2015 was over 3x PayPal in 2015.

For Chinese banks, earnings lost to FinTech innovators

may be only a small part of the existing profit pool, but it is

an opportunity lost to a big and growing market segment.

Source: Citi Digital Strategy

18

At the Tipping Point in the West, Past the Tipping Point in China

Global Ecommerce Mainly Comes From China & US 2015

Alipay TPV bigger than Paypal 2015 ($bn)

Source: eMarketer, Citi Research; Based on Gross Merchandise Value (GMV) Source: Company Reports and Citi Research; Alipay TPV 2015 is estimated based on discloser in 2014 adjusted for growth in Alibaba’s GMV.

Global $1.7tr

China $0.67tr (40%)

US $0.34tr (20%)

Alibaba $0.45tr (26%)

931

282

0

200

400

600

800

1000

AliPay PayPal

AliPay3.3x

PayPal

19

BATs Provide a Roadmap for GAFA

GAFA vs BAT

BATs are ahead of GAFAs when it comes to expanding to financial

services (higher market share).

Due to early entrance. Alipay and Tenpay were created over a decade

ago. Google was the first to venture into payments among GAFAs in

2011, seven years after Alipay.

Finance is strategically important for the BATs. In a country with a

relatively underdeveloped consumer banking system, payment is now

seen as core to their online to offline (O2O) strategy.

GAFAs operate in an existing well developed consumer payments

system and financial services are not as strategically important as it is

for BATs.

Amazon is more likely to be a major player in financial services due to

its focus on e-commerce.

Android Pay and Apple Pay are part of Google and Apple’s broader

strategy to further enhance customer stickiness to their OS ecosystem.

Payment Leaders in the west include PayPal, Buy rated, due to

exposure to rapidly growing online payment; Visa and Master Card,

both Buy Rated, because of solid market position, trend of cash to

electronic payments.

Western Union, Sell rated, is most at risk due to potential pressure on

remittance volumes and margin from increased FinTech competition.

Number of Users 2015

Business Model

Finance Products Volume

Google Around 200m monthly unique users

data monetisation

* Google Wallet (2011)

* Android Pay (2015)

Around 20m devices have Google wallet installed in the US; 1-2m active users in the US

Apple 800m (iTunes) data, software and hardware

* ApplePay (2014) * Around 24m Apple Pay compatible devices in the US; Around 4m users have used it at least once and 1-2m active users in the US

*< 2% transactions at top US retailers

Facebook 1,550m data monetisation

* Messenger Payments (2015) -

Amazon 304m eCommerce * Amazon Lending (2012): Loan to sellers

* Amazon Payments (2007): Online payment

* Globally more than 23 million customers (<10% of customers) have used the Pay with Amazon service since 2013.

* Payment volume from Pay with Amazon increased 150% year-over-year in 2015;

Number of Users 2015

Business Model

Finance Products Volume

Baidu 590m data monetisation

* Baidu Wallet (2014)

* Baidu Finance (2013): Including consumer credit, marketplace lending, wealth and so on

45m Baidu Wallet users

< 2% of third party payment (online + offline) market share

Alibaba 407m (number of active buyers over LTM)

eCommerce * Alipay (2004)

* Yu'e Bao (2013)

* Mybank (2015)

* Zhima Credit (2015)

* 33% third party transactions (online + offline) market share

* Around RMB 17tr ($2.6tr) transactions in 2015

Tencent 697m (WeChat) data monetisation

* Tenpay (2005)

* WeBank (2015): online/mobile bank

* Wilidai (2015): consumer credit

* 10% third party transactions (online + offline) market share

* Around RMB 5tr ($0.8tr) transactions in 2015


20

BATs Provide a Roadmap for GAFA

Banking’s Uber Moment

21

22

Diminishing Return of Physical Assets

Commercial Bank Branches Per 100k Adults By Region

“The number of branches and people may decline by as much as 50% over the

next years" - Antony Jenkins, the former CEO of Barclays

Northern Europe has already done a lot — Nordic and Dutch banks have cut total

branch levels by around 50% from recent peak levels.

The US banks on average appear to be about 5 years behind European banks

who are in turn about a decade behind the Nordic banks.

“Over the past one year, US banks have started to cut back, as they have realized

that interest rates are unlikely to increase any time soon… some banks in the US

will more than halve their branches over the next 5 years” - Citi GPS Report:

Digital Disruption March 2016

Source: WorldBank, Citi Research

-

5

10

15

20

25

30

35

40

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2018 2020 … 2025

Euro area United StatesEast Asia & Pacific (all income levels) Latin America & Caribbean (all income levels)Nordics

Forecasts

-33%

-45%

-50%

We Are At the Tipping Point of FTE Reduction

FTE in European banks is down 11% since 2008 crisis and down 5% for US banks

(2% per annum).

We see another ~30% reduction in staff next decade with a 3% decline per year

– Driven by automation: Branches and associated staff costs make up about

65% of the total retail cost base of a larger bank and a lot of these costs can be

removed via automation.

– Focus on Return in a Low Growth & Low Rate Environment: For countries

that have gone through a more severe financial crisis and consolidation FTE

reduction ranges between 3%-5% per year.

Source: ECB, United States Bureau of Labor Statistics, Citi Research Estimates

2.933.26

2.572.89

1.80 1.82

-

1

2

3

4

US Europe

Mill

ion

s

Peak 2015 2025

-40% -45%

23

People: Automation Tipping Point

Mill

ions

24

People: Automation Tipping Point

FTE Reduction 2014 vs 2008

Source: ECB, Sweden Banker’s Association , United States Bureau of Labor Statistics, Citi Research

-40%

-30%

-20%

-10%

0%

Latv

ia

Gre

ece

Den

mar

k

Irel

and

Spa

in

Est

onia

Rom

ania

Lith

uani

a

Net

herla

nds

UK

Fin

land

Bel

gium

Por

tuga

l

Slo

veni

a

Cyp

rus

EU

28

Italy

Hun

gary

Slo

vaki

a

Pol

and

Aus

tria

Ger

man

y

Fra

nce

Sw

eden US

So What Are the Challenges and Opportunities?

25

26

The Competitive Threat

China is the Silicon Valley of FinTech

EM Banks as Low PE Businesses?

DM Banks and FinTech: Co-opetition

DM: Watch Amazon ....

27

A FinTech Bubble?

“Over 100,000

Downloads”

Citi GPS: Global Perspectives and Solutions:

DIGITAL DISRUPTION: How FinTech is Forcing Banking to a Tipping Point

https://www.citivelocity.com/citigps/ReportSeries.action?recordId=51

https://www.citivelocity.com/citigps/ReportSeries.action?recordId=51

28

Appendix A-1

Analyst Certification

The research analysts primarily responsible for the preparation and content of this research report are either (i) designated by “AC” in the author block or (ii) listed in bold alongside content which is attributable to that analyst. If multiple AC analysts are designated in the author block, each analyst is certifying with respect to the entire research report other than (a) content attributable to another AC certifying analyst listed in bold alongside the content and (b) views expressed solely with respect to a specific issuer which are attributable to another AC certifying analyst identified in the price charts or rating history tables for that issuer shown below. Each of these analysts certify, with respect to the sections of the report for which they are responsible: (1) that the views expressed therein accurately reflect their personal views about each issuer and security referenced and were prepared in an independent manner, including with respect to Citigroup Global Markets Inc. and its affiliates; and (2) no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in this report.

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Analysts’ compensation is determined by Citi Research management and Citigroup’s senior management and is based upon activities and services intended to benefit the investor clients of Citigroup Global Markets Inc. and its affiliates (the “Firm”). Compensation is not linked to specific transactions or recommendations. Like all Firm employees, analysts receive compensation that is impacted by overall Firm profitability which includes investment banking, sales and trading, and principal trading revenues. One factor in equity research analyst compensation is arranging corporate access events between institutional clients and the management teams of covered companies. Typically, company management is more likely to participate when the analyst has a positive view of the company.

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NON-US RESEARCH ANALYST DISCLOSURES Non-US research analysts who have prepared this report (i.e., all research analysts listed below other than those identified as employed by Citigroup Global Markets Inc.) are not registered/qualified as research analysts with FINRA. Such research analysts may not be associated persons of the member organization and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. The legal entities employing the authors of this report are listed below:

Citigroup Global Markets Ltd Yafei Tian, CFA

OTHER DISCLOSURES

Any price(s) of instruments quoted are as of the prior day’s market close on the primary market for the instrument unless otherwise stated.

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ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST

Nick HungerfordNutmeg

@nickhungerford#ftscot

36Confidential -- 2016 Nutmeg Saving & Investment Limited

A mission to democratise finance

Nick HungerfordNutmeg co-founder

Fintech 2016 - Edinburgh


The financial sector has a trust problem


It also has a tech problem

Source: KPMG report on UK challenger banks, May 2016

Complex IT

Complex

products

Costly real

estate

Legacy

compliance

Manual

operating

models


And more broadly, while interest rates are low, society has a savings problem…


…so the old ways of saving – pension, house, bank deposits – are no longer working.


FinTech meets an urgent social need

DIY

IFA

Wealth managers

House & pensionW

ealth

Ways to save and invest

Exclusion / complexity

Bank


The Scots are saving pretty well!UK

% who feel confident they are “on track” to achieve desired income in retirement

30% 43%

% saving more than £500/month for retirement 11% 18%

Average pension pot size £34k £48k

Target income in retirement £27k £29k

% worried about impact of Brexit on pension 30% 37%


It’s not just tech change that is required

Established firms Nutmeg / other FinTechs

IT / tech stack Legacy, paper-based, few APIs APIs used throughout the business, cloud-based, proprietary purpose-built systems

Reporting Paper via direct mail, charges for ad hoc statements Online-first, live or daily reports

Transparency Many complex fee schedules, lack of reporting on total fees paid One simple management fee and no exit fees.A running total of fees paid on the dashboard

On boarding Paper-based 100% online-only for 80%+ of customers

Performance Net of fees - rarely if ever calculated for the customer Transparently presented and consistently top-quartile among UK wealth managers

Financial insight and advice

Delivered via humans, charged by hour, charges opaque Financial planning tools delivered online, as part of the Nutmeg service


Disaggregation of a bank

Foreign exchange

Payday

Payments

Banking

Personal credit

Investing and wealth management

Mortgages

Business lending

Disruption is yesterdays word: now it’s the norm

SalaryFinance


Where might all this lead?

• Tech firms moving into finance • Virtual reality pensions

• “Emotional surveillance” –tech to stop emotions upsetting investment strategies

• Wealth managers moving into concierge / family office services to protect HNW market share

• AI / chatbot advisors


Regulators have helped so far… and they need help

• Project Innovate

• Advice Unit

• Regulatory Sandbox

Pension Dashboard

FinTech Panel

Professional services hub for FinTech

FinTech bridges with priority global markets

New Bank Unit

BoE Open Forum


And together can do more…

• Government can speed up change

• Require electronic ISA and pension transfers (i.e. no paper forms) • Impose maximum ISA and pension transfer times• Introduce higher transparency standards on performance and fees

• Regulators can be more flexible

• Allow us to speak in language people understand – “money at risk” not “capital at risk”

• Allow wealth managers to rely on the due diligence of banks

• The tax system can channel capital to entrepreneurs

• Enterprise Investment Scheme (EIS) for university lecturers and students: Prof-EIS


So in conclusion

• Established firms in finance lack trust, have tech legacies, and struggle to balance profit and social responsibility (no VC money!)

• This creates an opportunity: help people to improve their finances –winning trust by doing so

• Regulators are keen, and have eyes on the future

• But policymakers can do more to help FinTechs grow and keep innovating

• The societal necessity is too great for us to slow down!

Bharat BhushanIBM

@_bharat_#ftscot

51© 2016 IBM Corporation |

Innovation Timeline: 1900 - 2008

1900 20081950

Automobile

Safety Razor

Transatlantic Flight

Aeroplane

Tape Recorder

Tabloid Newspaper

Vacuum Cleaner

Cornflakes

Nylon

Instant Coffee

Helicopter

Plastics

Bra

Traffic Lights

Assembly Lines

Hydrofoil

E=MC2

Sonar

Spin Dryer

Band Aid

Television

Lego

Jet Engine

Chocolate Chip Biscuit

Hearing Aid

Sliced Bread

Microwave Oven

Ballpoint Pen

Velcro

Photocopier

Jet Airliner

Nuclear Fission

Electronic Computer

Credit Card

DNA

Tupperware

Frisbee

Polaroid Camera

Colour TV

Silicon Chip

Superglue

Nuclear Power

Radial Tyres

The Pill

Plate Tectonics

Heart Transplants

Satellites

Hovercraft

Jacuzzi

Cassette Tape

Carbon Dating

Computer Mouse

Artificial Heart

Source: http://www.nowandnext.com

Radar

Pocket Calculator

Floppy Disk

Dot Matrix Printer

Moon Landing

Walkman

VCRSpace Station

IVF

Fax Machine

Gore-tex

email

IBM PC

Cell Phone

Space Shuttle

Compact Disk

Camcorder

eBay

MySpace

Google

Yahoo

Amazon

Skype

YouTube

Netscape

GPS

Apple Mac

CD-ROM

Disposable Camera

Post-it Notes

Home Computing

3-D Gaming

Flickr

Penicillin

Laser

Cats Eyes

Parking MetersAtom Bomb

ATMInternet

Games Console

Starbucks

Barcodes

Word Processor

Astroturf


The Greatest Innovations Of All Time?

Airplane

Car

Bicycle

Google

iPod

SKY +

Helicopter

Mobile Phone

Cats Eyes

Sliced Bread

Some Contenders …


Innovations that never took off

A snow screen for the face !! The family bicycle !! The one-wheel motorcycle !!

54

© 2016 IBM Corporation

1. Augmenting products to generate data

2. Digitising Assets

3. Combining Data Within and Across Industries

4. Trading Data

5. Codifying a Distinctive Service Capability

5 Patterns of Innovation


Cloud MobileData and

Analytics

Security and

Privacy

SocialProcess

AutomationIoT Content

Hardware and Software Optimisation

Infrastructure


Cognitive Era


Digital and Cognitive Era

User Centric

Value Centric

Collaborative

Speed and Agility

Scale

Secure

Transparent


Source: June 2015 World Economic Forum, The Future of Financial Services

6 Core Functions of

Financial ServicesThe World Economic Forum developed

the first consolidated taxonomy for

disruptive innovation in financial services

around 6 core functions that comprise

financial services:

Transactions / Payments

Deposits & Lending

Investment / Wealth Management

Insurance

Capital Raising

Market Provisioning

1

© 2015 IBM Corporation |

2 11 Clusters of Disruptionclusters were identified that were exerting

pressure on traditional business models

Disruptors are deploying better customer propositions in lower-cost models

1.Data Intensive

2.Platform / Ecosystem

3.Capital Light

59

Barclays SponsorsEuropeROW

64

Convert center screen resolution to 1920 x 782 @ 140dpi (13.714 x 5.586)

$4.8 Trillion Market by 2025

Source: Ovum: Digital Economy 2025: Core Scenario

66

© 2016 IBM Corporation

Ecosystems – Its all about customers needs

Speed

Bankingreal time booking,

payments, loans, …

Aggregation of traditional assets and new P2P

and

social banking products

ConvenienceMoney transfer, deposits, currency

transactions via twitter, mobile number,

email

Open Architecture: natively adaptable to

innovations e.g. Virtual

currencies like Bitcoin, open

protocols like Ripple, …

Open APIprovides powerful and easy to

understand, to setup and to use

interface to access all fidorOS

functions

Alternative Assetse.g. Travel loyalty miles, precious

metals

The Fidor Plusmulti-language, multi-currency, multi

jurisdiction, multi-CBS, white-label

fidorOS


fOS is API based,

Modular and Free of

Legacy

“Cloud native” bank built

on a cloud ecosystem of

financial product providers

Built it’s own API centric

core bank platform

Social is used exclusively

for acquisition, retention,

cross sell, R&D

Fidor has a community

of 500k+ users and 100k

“KYC” customers

CASE STUDY: Fidor Bank operating environment allows for a substantially lower cost structure

IT cost per user: -

$200

Traditional

Bank

$3 $15

Customer acquisitions costs: -

€7

Traditional

Bank

<€1

69

100% of relevant softwareavailable on the cloud

70

From idea to prototype in minutes

CREATE new cognitive, mobile

and IoT capabilities in the cloud

71

Creative disruption

Digital businesses move six times faster

72

What will you build?

Bob FergusonFCA

@TheFCA#ftscot

74

Bob Ferguson, Head of Project InnovateScot-Tech Fintech Conference 11 October 2016

Promoting Innovation through a collaborative approach to regulation

FCA: Project Innovate

75

• Launched in October 2014

• Promote FCA’s competition objective by:

Providing direct support to innovative businesses

Policy and process improvement

• While balancing opportunities and risk

Project Innovate: Aims

Aims

• “Innovation-friendly” regulatory system – policy and process improvement, balanced approach to opportunity and risk

• Help for innovative businesses to learn how to live with regulation, and to achieve market entry as smoothly as possible – fintech start-ups, pure tech players, large firms

Not

• A deregulatory initiative

• A soft option for innovative businesses

• An initiative just aimed at start-ups

76

How and with whom we collaborate

• Direct support for innovative businesses

• Regulatory sandbox

• Themed weeks

• Fintech ecosystem representative bodies

• Overseas regulators

77

Direct Support

• Provides one-to-one interaction with the regulator for innovative businesses

• Advice on regulatory implications of business concepts

• Advice on how to prepare an application for authorisation – but Hub does not make

authorisation decisions

• An “end-to-end” regulatory experience

• Service is confined to regulatory matters

78

Statistics: September 2016

Total number of requests for help – 608

Help given – 312

Firms authorised or awaiting decision – 42

Informal steers – 86

Eligibility criteria

• Genuine innovation?

• Consumer benefit?

• Research done?

• Need for support?

79

Regulatory Sandbox

80

• Created as a safe space to test new ideas with real customers without incurring disproportionate regulatory consequences

• Aimed at helping firms test the viability of an idea on a small scale, reducing product development time/cost

• An experiment for all parties involved, including the FCA

• Consumer safeguards built in to each pilot

• First cohort of firms due to begin live testing very shortly

• 69 applications received and 24 chosen to develop towards testing

• We have seen partnerships between start-ups and incumbents

• Second round of applications due to open in November

Contact

https://www.the-fca.org.uk/firms/project-innovate-innovation-hub

Phone: +44 (0)20 7066 4488

Email: [email protected]

81


#ftscot

Questions & Discussion

#ftscot

Morning BreakoutsPlease check rear

of badge

Fintech 2016Scot-Tech

Edinburgh

Yvonne Dunn, Partner

Luke Scanlon

Head of Fintech Propositions

11 October 2016

Overview

Todays aim…

• Engaging with

regulators

• Blockchain and

DLT – beyond the

hype

• The future of

robo advice

• Digital

currencies in

their own right

Engaging with regulators



• Challenger Bank Unit

• Robo Advice

• International co-operation

FCA and

Fintech

Distributed ledgers

88

Distributed

ledger activity

• 2,500+ patents

• 90+ businesses

• 90+ central banks

• Digital IDs

• Smart contracts

• Regulatory reporting

• Privacy issues

• Governance

• Cyber, fraud, money

laundering

Regulatory

concerns

Robo Advice

Background and

drivers…

• Perception of an “advice

gap”

• Robo advice to plug the

gap

• Threats and opportunities

• Different concepts across banking,

securities and insurance

• Advice vs guidance

What is

“advice”?

• Consumer

• Provider

Risks and

issues

Digital currencies

95

• Definitional challenges

• Policy priorities of

different jurisdictions

• Consumer protection

• Taxation

• Anti-money laundering

The future

of money?

The way forward

…• Fourth Money

Laundering Directive

(MLD4)

• Second Electronic

Money Directive

• Payment Accounts

Directive

• Payment Services

Directive (2)

• HM Treasury's views

• Cyber

• Collaboration

• Alternative finance

• Open data

Quick

update

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Precision Search

Precision Search

• Reduce the time and effort finding information - Learn how valuable Precision Search can be

• How to “Know what you don’t know” by Discovering Value in your Unstructured Data

• The Golden Rules for Unstructured Data Analysis that you need to know!

Welcome

Our mission …

To help any individual, business user or organisation who is at a loss with navigating and using their electronic documents and data

Why do we have this mission …

Back Office costs are too high

Risks of making a mistake are too high

Adoption of modern technologies outside of Advance Analytics, Risk Profiling and Social Monitoring is too low

IT change is considered as too expensive

Do you …

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…need to answer detailed questions on demand?

…want to reduce your search time for specific documents and improve the quality of discovery?

…require easy access to all your information?

Independent Analysis …Challenges within Fintech

How do we gain value …

WHOLEDOCUMENT

S

DOCUMENTS

BY SECTION

CONTENT BY

PARAGRAH

A SINGLE SENTENCE

• Big Data service focussed on unstructured data

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enable precise and accurate searches – capturing the Digital DNA of your data

• Scalable from single and small numbers of project documents to corporate shared

drives containing millions of documents

Reduce the Time and Effort Spent Searching

Why is SEARCH important?

50% Indexed

>25% time

$48,000 per weekOr $2.5m per year

Precision Searching …

Precision Searching …Material Breach

Precision Searching …

Know what you don’t know

Discovery Techniques …

• Content Categorisation

• Topic highlighting

• Entity highlighting

• Content Summarisation

• Sentiment Analysis

• Word Clouds – Heat Maps

Discovery – What is the reality …

NDA’s Contracts NDA’s Contracts

Pharma

Food Oil & Gas

Retail

A

A

Template

Customer

A VariationsNDA’s

A

A

Template

Customer

AVariationsContract’

s

The Golden Rules for Unstructured Data Analysis that you need to know

Analysis

• Redact Sensitive

Information

• Keep it simple

• Put the power into the

hands of all applicable

users – not just the select

few

• Use precise search tools,

else you are wasting time!

Come and see us on our

stand for a FREE trial

Directive (EU) 2015/2366 on payment services in the internal market -12/1/2016

Full-proxy enables superior user-to-application experience

End Users

Account info

Aim of PSD2

Still to confirm Regulatory Technical Standards

Short timeframes

Strong Customer Authentication - SCA

XS2A – Access to account rules

4

3

2

1

122

PSD2 key points

Write your own?

API security?

Other alternatives?

Open API?

TO API OR NOT API?

OPEN API?

DATA STANDARD

RULES BY WHICH DATA

ARE DESCRIBED AND RECORDED

API STANDARD

SPECIFICATIONS THAT INFORM THE DESIGN,

DEVELOPMENT AND

MAINTENANCE OF AN OPEN API

SECURITY STANDARD

SECURITY ASPECTS OF THE API STANDARD

Open Banking Standard

A set of specifications and rules addressing the data, technical and security aspects in an open API environment,

supported by a Governence Model

https://uk.openbankproject.com

GDPR

SECURITY CONSIDERATIONS.

Authentication

Malware / Social Engineering

Scale

DDOS

http://blog.smartbear.com/readyapi/api-security-testing-how-to-hack-an-api-and-get-away-with-it-part-1-of-3/

DYRE - ZEUS

Internet of things

Al kazeem cyber fighters

API PROTECTION

JSON/AJAX -

XML

GWT

L7 DDOS

© F5 Networks, Inc 127

Attack vectors – IOT v API v PSD2

IoT PlatformMQTT

MQTT

HTTP

Gatewa

y

Gateway

MQTT

HTTP

MQTT

HTTP

Customers

DDoS

Attack

HTTP

What’s the problem

• Protocol heterogeneity

• Weak cryptography

• Complex Authentication

• Tricky Authorization

• Siloed Security

• Global scalability

https://f5.com/about-us/news/articles/mirai-the-iot-bot-that-took-down-krebs-and-launched-a-tbps-ddos-attack-on-ovh-21937

Market opportunity

New channels

Must get the security right

Must comply

Risk v Reward

Thank you.

COMMERCIAL IN CONFIDENCE © Copyright 2016 Fujitsu Limited

Passwords – Do Not Resuscitate

David Cameron

Business Development Director – Digital Financial Services

1 COMMERCIAL IN CONFIDENCE

Bill Gates – But what was the year?

“Traditional password-

based security is

headed for extinction,

because it cannot meet

the challenge of

keeping critical

information secure.”

2004 RSA Conference -

Copenhagen


Lazy Passwords

ID as currency: put these in order of ‘value’

3

FUJITSU RESTRICTED - UK & IRELAND EYES ONLY

ID as currency: put these in order of ‘value’

Driving Licence

Open market value approx. £15-30

4


Debit/Current Account

approx. £4

Credit Card £ 0.60

The Challenge

41%of all

Fraud in

the UK is

IDFraud

5


The Challenge

80%of account

opening

and ID theft

fraud is

committed

on line.

6


The Challenge

52%increas

e in

fraud

for the

under

30’s

7


The current baseline is Password based

authentication…

8


…using 2 factor authentication

9


…however this is negated by Smartphones

10


…and passwords are becoming ever more

complex

11


So lets use biometrics !


But there is a problem…


How do you verify identity at enrollment?

ID Document

3rd party data check

LivelinessCheck

Biometrics

Facial and or Voice

Know your Device Check

Geolocation check


Click in Slideshow mode to access video


Current approach in the market

ID Document

3rd party data check

LivelinessCheck

Biometrics

Facial and or Voice

Know your Device Check

Geolocation check



Risk based transaction authorisation

So far so good but how do you make it work?


Passwords – Do Not Resucitate


Do not resuscitate does not mean do not treat!

Don’t rely on biometrics alone

for Identity and Verification

Do maximise alternative

identification technologies




Don’t push all your customers

through a standard process

Do trust 3rd party data sets to

remove friction and provide insight


Don’t try to do everything yourself!


Questions

Q&A


#ftscot

Welcome Back

Dave BirchConsult Hyperion

@dgwbirch#ftscot

www.chyp.comPlease Copy and Distribute157

Who will make money?

A discussion about the future of

digital currency

Dave Birch

@dgwbirch

Fintech 2106

Edinburgh

October 2016

www.chyp.comPlease Copy and Distribute

David G.W. Birch

Director of Innovation at Consult Hyperion

Visiting Professor, University of Surrey Business School

An internationally-recognised thought leader in digital identity and digital money;

Named one of the global top 15 favourite sources of business information (Wired magazine);

In the London FinTech top 10 most influential commentators (City A.M.);

One of the top ten Twitter accounts followed by innovators, along with Bill Gates and Richard Branson (PR Daily);

One of the top ten most influential voices in banking (Financial Brand);

Named one of the “Fintech Titans” (NextBank);

Ranked Europe’s most influential commentator on emerging payments (Total Payments magazine).

158


Agenda

159

What is digital currency?

Who might issue digital currency?

Who do I think will issue digital currency?


Currency and Digital Currency

160

Let’s agree on the terminology

And then we can move on


Dumb Money and Smart Money

161


Virtual Currency

162


Digital Currency

Strictly speaking a currency board, not a currency

163


Cryptocurrency

164


Taxonomy Strawman

165


Currency and Issuers

166


Issuers: the 5Cs

167


Central Bank

There are obvious +ve GDP benefits to a digital currency

168


Commercial Bank

Swindon, City of the Future

169


Company

Kenya vs. Ecuador, currency board vs. currency

170


Community

Reduce internal transaction costs, increase external transactions costs

171


Cryptography

Distributed Autonomous Organisations powered by ETH

172


What’s the Story?

173


BritCoin or BritPESA?

174

I look forward to a

time when the

successors to Bill

Gates will have put

the successors to Alan

Greenspan out of

business.

Edward de Bono

(1993)


Looking Forwards

175

The electronic money

world looks much more

like the neolithic world

economy before the

invention of money than it

looks like the market as

we have known it in the

past few hundred years

Social anthropologist

Jack Weatherford

The Fiscal Frontier (1998)


Contact

176

Browse www.chyp.com

Follow @chyppings

Mail [email protected]

Comment http://www.chyp.com/media/blog/

Listen http://www.chyp.com/media/podcasts/

Consult Hyperion UK

Tweed House, 12 The Mount

Guildford, Surrey GU24HN, UK.

+44 1483 301793

Consult Hyperion USA

535 Madison Avenue, 19th Floor

New York, NY 10022, USA.

+1 888 835 6124

http://www.chyp.com/


http://www.chyp.com/media/blog/


Who Are Consult Hyperion?

Consult Hyperion specialises in working out the

opportunities and threats which result from the

harmony and collision of security, networks and

transactions.

We are constantly assessing these factors, as they

change continuously, and delivering ideas, solutions

and products to our clients

177


What Do They Do?

We have a structured and practical approach to secure

electronic transaction systems from the local to the global

178

StrategyRoadmappingMarket AnalysisBusiness Modelling

PrototypingRequirements AnalysisRisk AnalysisSystem Architecture

Technical SpecificationProcurement SupportSoftware DevelopmentVendor Management

Project ManagementCertification ManagementAcceptance TestingEvaluation

We can help clients in all phases of the product and service lifecycle, from the whiteboard scribble to the person in the street’s everyday use


Who Do They Do It For?

179


Learn about tomorrow’s transactions

Understanding the

Blockchain

Mobile & Cloud-

Based Payments

The World of Payment

Acceptance & mPOS

Digital Identity &

Authentication

Our new education programme

Demystify the Blockchain &

Bitcoin to understand what it

means for your business & the

future of transactions

Easy-to-understand introduction

into the key concepts, practical

implications and opportunities

that this technology could bring

to financial services and other

sectors?

Essential learning on

implementing & launching

mobile NFC or tokenised m-

payment services

Key aspects of Secure Element

(SE) & Host Card Emulation

(HCE) technologies, deployment

models, tokenisation &

credential management are all

covered

Understand the new POS world

driven by innovation in an ever

changing retail payment

environment

Whether an acquirer, payment

provider or retailer, learn how to

build the right business case,

strategies & solutions to meet

the opportunities of the new

world of payments

Learn the importance of trusted

transactions in a digitally

connected world and what it

means for your business

Valuable insight into balancing

risk reduction vs customer

experience; showing you how to

select, implement and manage

the right identity solutions for

your business

In partnership withTo register / more information: www.paymentbusinessschool/events

Jason BatesMonzo & 11:FS

@monzo @11fsteam#ftscot

1%

FINISHED

DIGITAL

BANKING

IS ONLY

@jasonbates

“11:FS is a team of fintech operators who help banks create

and launch truly digital services.”

@jasonbates

@jasonbates

MY BANK ALREADY HAS AN APP!

Online banking 2016

@11FSTeam

Online banking 1990

@11FSTeam

$200bn

@jasonbates

Digitized productsare not the same as

Digital services

@jasonbates

@jasonbates

The ‘fintech approach’:

1. Use truly digital capabilities to ...

3. who are underserved or overcharged

2. deliver valuable services to customers…

@jasonbates

• Real time

• Intelligent

• Contextual

• Human

• Extendable

• Services

Digital R.I.C.H.E.S

1. Use truly digital capabilities

@jasonbates

THE GAP

Current Account:

balance

card

statement

transfer

pay

receive

interest

overdraft

2. to deliver valuable services to customers…

The jobs we need doing?How am I doing? (vs last month?)Get to the end of the monthManage monthly, quarterly, annual billsBuy something bigBe ready for a rainy daySave for my holidaySend money to friendsDeal with unexpected problemsBring my finances togetherKnow I’m getting a good deal….

@jasonbates

3. who are underserved or overcharged…

@jasonbates

1%

FINISHED

DIGITAL

BANKING

IS ONLY

Karen KerriganSeedrs

@karenseedrs#ftscot

www.seedrs.com

The Power of the CrowdFintech 2016, Our Dynamic Earth, Edinburgh

Karen Kerrigan (Chief Legal Officer, Seedrs / Director, UK Crowdfunding

Association)@KarenSeedrs 11 October 2016

DEBT EQUITY

DEBT BASED

SECURITIES

or BONDS

Individuals buy a

security, normally a

form of bond, to

earn interest and

their capital back.

P2PIndividuals lend

money to other

individuals to earn

interest and their

capital back

.

P2B

Individuals lend

money to

businesses to

earn interest and

their capital back

These fall under the new regulated

activity of Facilitating loans via an

electronic platform. The FCA calls

this loan based crowdfunding

A regulated activity

that the FCA calls

Investment based

Crowdfunding

‘PEER TO PEER’

or

‘MARKETPLACE’ LENDING

A regulated activity

the FCA includes in

Investment based

Crowdfunding

INVOICE

TRADING

Individuals buy

invoices at a

discount, then sell

them back to firms

at a profit.

Not regulated by

the FCA

Individuals buy

shares in early

stage businesses

for capital growth

or dividends

SNAPSHOT OF THE PEER/CROWD MARKET

IN 2016

£325mn £909mn £1.5bn £6.2mn £393mn

Individuals give

money in return

for a reward or

recognition,

product or service

REWARDS

No financial return

so not regulated

by the FCA

£54mn

A Bit of Context

• Early-stage investment was once limited to the very few—

those with lots of money and lots of time on their hands

• But many different types of people want to invest in these

businesses, whether to build a portfolio, support a friend or

be part of a company they like

• Meanwhile, many businesses want to raise capital from a

community rather than just a few angels and funds

• Crowdfunding has emerged in response to these needs

Emergence of Platforms

• Crowdfunding started around 2007 with the launch of

rewards-based platforms (Kickstarter, Indiegogo)

• Soon thereafter, platforms tried to expand to equity, but

they did so on an unregulated basis, and most failed

• Seedrs became the first regulated equity crowdfunding

platform in 2012

• Since then, dozens of equity crowdfunding platforms have

emerged across Europe

Invest in businesses

you believe in and

share in their success

It's simple and free for anyone in

Europe to sign up. Once your investor

profile is complete you'll be able to

access all campaigns, ask

entrepreneurs questions, request further

information and invest.

Discover businesses

To invest, choose the amount and

securely pay for your investment

by debit card or bank transfer.

It's simple to create a diversified

portfolio of investments to spread

your exposure to risk.

Start investing

Become a legal, ordinary

shareholder when the round

closes. Receive regular updates

and engage with each business

through Seedrs or offline. If the

business does well you'll receive

a return on your investment.

Share the success

Raise capital and build

community through a

simple online process

Start by answering our story-building

pitch questions. Explain your

business, show off your team, lay out

the market opportunity and highlight

what you plan to do with your

investment. Once you’re happy with

it, submit it to our team for review.

Create your campaign

You have up to 60 days to raise

investment. We’ll share best practise

creative marketing ideas for you to

reach out to your network of friends

and family, customers, business

angels, press and others. And we will

share your campaign with our active

investor base.

Get funded

Once all of the legal paperwork is

completed, we will transfer funds to

your business. You’ll be able to keep

in touch with your investors for

mentorship, marketing outreach,

networking and more, all through

your own investor relations portal.

Grow your business

Oppo raised £398,390

from 538 investors

in just 6 hours

Zoopla-backed

Landbay raised over

£2,600,000 from

970 investors

FreeAgent raised

over £1,015,000

from 690+ investors

Thank You

[email protected]

@KarenSeedrs

seedrs.com

Investing involves risks, including loss of capital. Seedrs Limited is authorised and regulated by the Financial Conduct Authority.

Gavin LittlejohnFDATA

@GavinLittlejohn#ftscot

#ftscot

Welcome Back

Graeme JonesScottish Financial

Enterprise

@ScotFinEnt#ftscot

Scotland’s FinTech OpportunityConnecting Scotland

Scotland’s FinTech Opportunity – Executive Summary

2

Current Landscape – Deloitte, SFE and SE Research

1. Vision and Strategy

• With your support we aim to build a thriving globally connected Fintech ecosystem within Scotland. Leading to investment attraction,

new industries, employment and education – we need to strengthen the message and not be afraid to share it.

• Buy-in is required from all participants across the eco-system – we need to make sure the strategy incorporates every voice.

• There is a need to be bolder about the positive reasons why Scotland could be a key player in Fintech – we need to ‘extol the virtues’

2. Development support is required to FinTech start-ups

• No truly dedicated FinTech space for the whole ecosystem to use – a FinTech ‘hub’ is required to bind the community and accelerate growth.

• A ‘hub’ is required that contains a range of support functions and industry specialists to help move Scotland forward as a leader in FinTech.

• It is recognised that whilst there are a number of things happening in FinTech there is no ‘epicentre’ to draw it together.

3. Skills and Talent

• Attraction, development and retention of required skill sets to support FinTech is a challenge - there is a risk of ‘brain-drain’ if we can’t

create an environment that helps start-ups flourish.

• We need to focus time on highlighting how exciting ‘tech’ in FS can be – FS has historically been seen as an unlikely place for innovation.

• Dedicated ‘grass-roots’ school programmes, further education support and development initiatives are needed to help develop ‘business readiness’ and

awareness of the opportunities FinTech can create in Scotland.

4. Barriers to entry

• Key challenges include defining a clear use-case for products and services, navigating internal procurement process and regulation

restricting Banking/Fintech collaboration or acceptance.

• Accessibility of funding, pace of funding, and clarity around best funding options all hampers the ability of start-ups to really grow or

scale at pace.

•

5. Cohesion across the eco-system

• Little awareness of groups and support networks across the eco-system - action is needed to really ‘bind’ the community, physically and

virtually

• Agreement that the creation of a FinTech hub or centre would help massively in nurturing start-ups, driving innovation in the

incumbent firms, create partnering opportunities here and further afield and helping enlighten the next generation of talent.

6. Uncertainty of ‘when’

• Uncertainty around when FinTech will begin to flourish – no doubt it will, and a sense of momentum building (FS incumbents).

• Early opportunities in the next 3-5 years include Robotics, cognitive technology, distribution of payments, IoT and advanced

analytics.

• Start-ups are very clear that the opportunity is now, and keen to work with FS incumbents on accelerating growth.

Scotland’s FinTech Opportunity

External FinTech Environment - Summary


Our Vision

6

A recognised FinTech centre where new ideas are generated, growth accelerated and communities are closely connected. A focus on our FinTech ‘youth’ and a desire to truly create a thriving industry.

.

• 20 new ‘home-grown’ FinTech

solutions.• 2 FinTech unicorns

‘born in Scotland’.

• £200m in new revenue into Scotland

• 20% growth in established Firms employing FinTech resource.

• 15 new FinTech courses through Scottish schools, colleges & universities

PROFILE I N F R A S T R U C TUR

E &

INNOVATION

T A L E N T F I N A N C E & S U P P OR T

A clear message and impactful brand - an agreed set of c lear messages the highlight what Scotland’s

FinTech focus is;

• Occupying a space that is emerging and fresh. Not a repeat of what is done elsewhere.

• A fresh, non-affiliated brand that is impactful and has international resonance.

• A dedicated set of programmes, events, that plants our strategy and vision firmly in the mind.

• Creates attraction / drives

‘FinTech Scotland’ brand.

Lead: T B C

A FinTech hub to connect our communities. A physical space that allows the eco-system to work together in creating or sharing solutions, and nurturing talent;

• A hub that supports talent growth, education, knowledge sharing and experience.

• A place for allparties from acrossthe ecosystems.

• Non affiliated, engendering the brand, focussed on success.

• Unique to Scotland but

connected globally.

Lead: T B C

A clear programme of support and education accessible to all who have an interest.

• From pre-school to

industry…

• Identified and empowered FinTech mentors to support all aspects of the pathway – from schools tobusiness.

• Wide-variety of support to all ages, leveraging but developing existing support and education bodies.

• In-house training via thehub to ‘throw open the

doors’ Friday.

Lead: T B C

Fine-tuning the existing support services and models that exist to support FinTech more closely;

• Closer collaborationbetween private andpublic funding.

• Clarity and simplicity of

funding models.

• Dedicated financial support model beyond series A funding.

• C lea r relationships in place with country initiatives and trade bodies that c a n support our growth.

• Funded access to SMEs

and dedicated support.

Lead: T B C

What could success look like 5 yrs from

now?

• Increase of investment

• Protection andgrowth in jobs in F S

• Retraining opportunities

• Growth in entrepreneurship

• Attraction of global

Potential targets:

FinTech Scotland: Our Vision


Connecting Scotland here and further – Four immediate areas we will

focus on:

1. Creating the Ecosystem – Physically and Virtually

• Strong and closely located Financial Services sector perfectly placed for collaboration and rapid development

of FinTech solutions.

• Strong heritage in creation of new technologies and solutions – exceptional skill base.

• Established communities and network in areas such as customer / service experience design (including

gamification), data management, distribution of payments and analytics.

• Creating the environment for established FS players with FinTech (disrupters and service providers) to share,

partner and develop ‘healthy’ relationships.

2. Connecting Scotland and Scotland into the broader Fintech Community

• Opportunity to build close connections and leverage the intellectual capital that exists in all of the

communities noted above.

• Geographical proximity of the eco-system – it all exists within easy reach.

• Some connection in place through current tech incubators – although not specifically focussed on FS.

• Well established infrastructure.

3. Value and Quality of Life

• Lower cost of living value compared to other sites such as London.

• High quality of life vs. lower cost of living.

• Progressive and outward looking community.

• A strong sense and willingness to collaborate.

4. Talent

• Leading Universities providing a platform to develop industry-focused graduates entering FinTech.

• Established ‘tech’ community – albeit not focussed on FS.

• Deep FS experience across multiple areas and segments.


What is in a network…

We should not underestimate the value that can be created through the creation of a successful

network.

218


Our target plan

We will develop detailed plans across our priority areas between now and the year end,

however we have identified some immediate / quick wins

u

u

Quick Wins

219


What we need from you

Considerable progress has been made to identify and clarify the scale and extent of FinTech in Scotland and the

'size of the opportunity’. The opportunity facing us is global and outward looking and will create a 'halo' effect for

Scotland's brand; as a transformational and innovative country.

1. Active engagement and signposting

To work with us on the 4 priority areas we have identified to ensure we start to leverage the full potential of Scottish

FinTech from a 'Team Scotland' standpoint. We need to work collaboratively with Government, Education, Universities and

business to make this happen; and at pace.

• Action: Ongoing ministerial approval, engagement and supportive commentary; will be very helpful, in keeping up

momentum

2. Creating the Ecosystem

We know from looking across the globe, that having a FinTech Ecosystem is a critical deliverable. A team should be

formed, reporting into FiSAB; or a sub group, to look at how a Hub might be jointly funded by Government, Academia,

Edinburgh City Council and Scotland's FS companies; and to identify possible locations/buildings.

• Action 1: Ministerial decision maker to work alongside this initiative and support in designing the overall ecosystem

solution. This contact will also be a liaison point with other ministerial areas which will be impacted (Education /

Economic Policy / Taxation / Enterprise / Immigration etc)

• Action 2: detailed plan to be established that signals the location, capabilities, infrastructure of a physical community hub

for discussion and agreement by the end of the year - Confirmation there is potential budget to support the creation of

a Fintech ecosystem

3. Communication strategy

A global digital marketing campaign will be required to support the above; similar to 'Visit Scotland', to put us on the

map. A Global FinTech conference/festival would be part of this 'hearts and minds' campaign with incremental

activities in between e.g. hackathons and spotlight sessions hosted by FS now

• Action 1: Now and onwards – all FS players to commit to one hackathon or spotlight session between now and end Q1

2017

• Action 2: Detailed communication and marketing campaign aligned to 2, to be agreed at end December

220

Artefacts


Supporting Documents


Artefact 1 – FinTech Steering Group and high level Terms of

Reference

• Colin Adams & Hugh Edmiston - Edinburgh

University

• Gillian Docherty - Datalab

• Lesley Downie - SFE, Secretariat

• Stephen Flaherty - JPMorgan

• Sameer Gulati - Innovate Finance

• Colin Halpin - HSBC

• Sharon Hamilton - SE

• Ian Hanson - SDS

Strategic Aim

To develop, agree and implement an industry led strategy for Financial Services Technology in Scotland which

includes an action plan, stakeholder roles and responsibilities, and an agreed resource plan for the

implementation of the action plan against agreed strategic objectives and KPIs.

Purpose and remit

The Fintech Steering Group will develop a Fintech Strategy for Scotland based on:

• Identification of the strengths of the Scottish ecosystem for Fintech including an assessment of our

international competitiveness

• Research into global trends and projections of growth

• Research into good practice for the development and implementation of industry-led strategies elsewhere

• Consultation with, and influencing of, a broad range of stakeholders including; academia, SMEs, large firms,

research institutes and public agencies

• A thorough appraisal of resource availability across all stakeholders

• A comprehensive monitoring and evaluation framework to assess progress towards the strategic objectives

Upon publication of the strategy, the group will have ongoing responsibility for overseeing the delivery of the

principal act ions, and to update the Financial Services Advisory Board (FiSAB) on progress

SFE FinTech Steering Group members

• Derrick Hastie - AAM

• Stephen Ingledew - Standard Life

• Russell Irwin - KPMG

• Graeme Jones - CEO SFE

• Stuart Lang - EY

• Gavin Littlejohn - FinTech practitioners representative

• Kent Mackenzie - Deloitte LLP

• Louise Smith - Chair RBS & Laura Thom

• Philipe Meyer - Avaloq


Artefact 2 - Infographic

223


Artefact 3 – Supporting Research (Examples)

In March 2016 Deloitte were commissioned by Scottish Enterprise to produce a report “FinTech Scoping Review:Establishing Scotland as a FinTech centre”.

Deloitte have also drawn on their global network to also consider Scotland’s opportunity in relation to other centres across the world and

identify the common components that are required to make Scotland a successful FinTech centre.

Fi n Te c h S c o p i n g Re v i e w

Establ i shi ng Scot l and as a F i nTech centre

This project involved extensive primary and secondary research of the FinTech industry in Scotland as well as interviews

with key stakeholders in the Scottish FinTech eco-system to determine the opportunity for Scotland to emerge as a

FinTech centre, the challenges, and the actions required by each component of the eco-system to really help Scotland

accelerate its potential. The outputs from this research form the basis of our focus.

M arch 2016

In summer 2016 TheCityUK, in it’s capacity as delivery partner to the Financial Services Trade and Investment Board (FSTIB), asked Deloitte

to produce a report focused on enhancing the attractiveness of the UK to FinTech. The exercise included interviews with

industry experts, practitioners, the global Deloitte network and desk based research to review 5 key criteria and develop a

set of recommendations.

We are using the learnings from this to help as we consider the opportunity for Scotland to become a FinTech Hub.

A definition of the FinTech eco-system in Scotland has been created and documented by Deloitte.

The definition and view of the eco-system is being used to ensure each participant in the

community is engaged appropriately.

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Panel DiscussionLoral Quinn – Sustainably

Kevin McCallum – FreeAgentLouise Smith – RBS

Gavin Littlejohn – FDATAGraeme Jones - SFE

#ftscot

Drinks & NetworkingIn Exhibition Area Sponsored by

#ftscot

Fintech 2016Scot-Tech

Edinburgh

Yvonne Dunn, Partner

Luke Scanlon

Head of Fintech Propositions

11 October 2016

Overview

Todays aim…

• Engaging with

regulators

• Blockchain and

DLT – beyond the

hype

• The future of

robo advice

• Digital

currencies in

their own right

Engaging with regulators



• Challenger Bank Unit

• Robo Advice

• International co-operation

FCA and

Fintech

Distributed ledgers

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Distributed

ledger activity

• 2,500+ patents

• 90+ businesses

• 90+ central banks

• Digital IDs

• Smart contracts

• Regulatory reporting

• Privacy issues

• Governance

• Cyber, fraud, money

laundering

Regulatory

concerns

Robo Advice

Background and

drivers…

• Perception of an “advice

gap”

• Robo advice to plug the

gap

• Threats and opportunities

• Different concepts across banking,

securities and insurance

• Advice vs guidance

What is

“advice”?

• Consumer

• Provider

Risks and

issues

Digital currencies

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• Definitional challenges

• Policy priorities of

different jurisdictions

• Consumer protection

• Taxation

• Anti-money laundering

The future

of money?

The way forward

…• Fourth Money

Laundering Directive

(MLD4)

• Second Electronic

Money Directive

• Payment Accounts

Directive

• Payment Services

Directive (2)

• HM Treasury's views

• Cyber

• Collaboration

• Alternative finance

• Open data

Quick

update

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Fintech 2016 Edinburgh

Technology

Transcript of Fintech 2016 Edinburgh