the full picture, this week – 17 May 2019

by | May 17, 2019 | All Blog Posts, the full picture this week, Featured

Let us put you in the picture this week, as we round-up and react to the latest news from the financial crime compliance and technology sectors.

This time, we highlight a new report that shows that the UK leads the way in Europe when it comes to tech scaleup investment.

Elsewhere, there is a warning to organisations that they must prioritise the need to obtain explicit consent when using consumers’ biometric data.

These issues, and more from around the globe, give us plenty to dive into for your Full Picture, This Week…

Click here to get the full picture sent to your inbox every Friday.

UK leads the way in Europe for tech scaleup investment

The importance of technology to the UK economy has been in focus, as it was revealed that the nation attracted five per cent of global high-tech scaleup investment last year. This places it fourth in the world, ahead of the likes of Germany, France and Sweden.

The standings come from the annual report from Tech Nation, which analysed data from partners including Companies House, Organisation for Economic Co-operation and Development (OECD) GitHub, Pitchbook and Streetbees. Investment for UK high-growth digital tech firms also grew 61 per cent between 2017 and 2018, driven largely by UK tech scaleups, which delivered £5 billion of the £6.3 billion total. The UK’s strongest tech sub-sector, and where it currently ranks as number one in the world, is fintech, with investment in UK high-growth financial firms hitting £4.5 billion between 2015 and 2018.

the full picture, this week – 17 May 2019 | Eileen Burbidge, Tech Nation | encompass blogA further report, from Tech UK, also shows that fintech and insurtech were the biggest employers among high-growth UK digital tech firms last year, employing 18% and 24% of the workforce respectively.

Eileen Burbidge, chair, Tech Nation, commented on the findings, saying:

The UK has an incredibly pivotal role in the global tech scene. Nowhere is this more evident than in the fintech sector where the UK is ranked number one in the world; an enviable position that has been established with decades of hard work, entrepreneurial talent, innovation and supportive policymakers.

London continues to uphold its reputation as the UK’s leader in attracting high-growth tech investment, receiving £9 billion from 2015 to 2018. Cambridge came second, at £583 million, with other UK cities continuing to make considerable ground, according to Tech Nation.

Read more from FStech here.

the encompass view

To date, individuals have been the main beneficiaries of the cost and efficiency advantages offered by fintech, as this research highlighting current success clearly shows. The products and services offered by fintech firms have matured and become widely accepted, and these firms are now seeking to make an impact on the lucrative corporate market, with a particular focus on small and medium-sized businesses, which have typically been underserved by traditional financial institutions.

This strategy has resulted in increased interest from traditional financial services firms in regtech solutions. These firms need to respond to increasing competition from fintechs by upping their focus on the customer experience, or they risk losing business.

Across the globe, governments are promoting innovation in financial services. Hong Kong, for example, is currently awarding virtual banking licenses to financial institutions seeking to digitally transform their offerings. In the UK, organisations such as Nationwide and MetroBank have benefited from the Banking Competition Remedies (BCR) Capability and Innovation Fund, which is designed to promote competition in the market through the modernisation of existing offerings or the development of new business current accounts or product propositions.

Innovation is vital to growth but requires a forward-thinking approach and a commitment to making long-lasting changes, particularly around technology. At encompass, we are currently seeing a significant awareness of and commitment to getting the most out of innovation from mainstream financial services firms. We expect this is something that will only continue to grow over the coming years, with regulators and governments supporting developments.

the encompass view

To date, individuals have been the main beneficiaries of the cost and efficiency advantages offered by fintech, as this research highlighting current success clearly shows. The products and services offered by fintech firms have matured and become widely accepted, and these firms are now seeking to make an impact on the lucrative corporate market, with a particular focus on small and medium-sized businesses, which have typically been underserved by traditional financial institutions.

This strategy has resulted in increased interest from traditional financial services firms in regtech solutions. These firms need to respond to increasing competition from fintechs by upping their focus on the customer experience, or they risk losing business.

Across the globe, governments are promoting innovation in financial services. Hong Kong, for example, is currently awarding virtual banking licenses to financial institutions seeking to digitally transform their offerings. In the UK, organisations such as Nationwide and MetroBank have benefited from the Banking Competition Remedies (BCR) Capability and Innovation Fund, which is designed to promote competition in the market through the modernisation of existing offerings or the development of new business current accounts or product propositions.

Innovation is vital to growth but requires a forward-thinking approach and a commitment to making long-lasting changes, particularly around technology. At encompass, we are currently seeing a significant awareness of and commitment to getting the most out of innovation from mainstream financial services firms. We expect this is something that will only continue to grow over the coming years, with regulators and governments supporting developments.

Magalie Pimentel | Head of Marketing, encompass

Warning over data consent

The Information Commissioner’s Office (ICO) has warned that organisations need to obtain explicit consent when using consumers’ biometric data.

In an official blog, the regulator’s deputy commissioner for policy, Steve Wood, responded to its investigation of HM Revenue and Customs’ Voice ID service, which led to the government having to delete the data of around five million customers for whom consent was judged to be out of date.

Wood explained that, under the General Data Protection Regulation (GDPR), one of the key points about using biometrics is that it comes under a special category that requires extra protection. Subsequently, any consent has to be explicit and cannot be overridden by the benefits that any relevant technology can provide.

With the adoption of new systems comes the responsibility to make sure that data protection obligations are fulfilled and customers’ privacy rights addressed alongside any organisational benefit. The public must be able to trust that their privacy is at the forefront of the decisions made about their personal data.

Get the latest.

Canada’s relationship with money laundering examined

Canada’s lax laws on areas including identifying the true owners of property have made it a hot-spot for money laundering, according to new analysis.

Kevin Comeau, author of a recent C.D. Howe report on money laundering, has taken an in-depth look at the country’s relationship with the issue and why the problem continues to exist.

With some of the weakest money-laundering laws among liberal democracies, Canada stands out as a place to launder cash, concluded Comeau, a retired lawyer and member of Transparency International Canada’s working group on beneficial ownership transparency.

Read more of what he has to say.

news in brief

Belfast City Council has teamed up with tech firm Colu to launch the UK’s first local, incentive-based digital currency. Belfast Coin will operate as a rewards platform, aiming to encourage locals to carry out “impactful behaviours to further improve the city”. Residents will get coins in return for things such as shopping at local businesses, volunteering and civic activity. These coins can then be used for purchases at participating shops and restaurants. Find out more.

The financial regulators of the Baltic and Scandinavian countries have formed a permanent working group to improve their Anti-Money Laundering (AML) performance. The Bank of Lithuania and the financial services authorities of Sweden, Norway, Finland, Denmark, Iceland, Estonia and Latvia met earlier in the month. The eight regulators said they had “agreed on measures to enhance the cooperation between the authorities.” Read more.

The US House of Representatives is launching task forces looking into fintech and artificial intelligence in financial services. Set up by the House Committee on Financial Services, the fintech task force will look at domestic and international regulation of the nascent sector as well as the infrastructure and legal and regulatory framework for efficient payment. Finextra has the latest.

Denmark’s financial institutions aren’t doing enough to ensure they are not used to launder money or finance terrorism, an extensive review by the country’s supervisor found. Bloomberg reports that executives are aware of the risks but don’t know in practice what they really need to do, the Danish Financial Supervisory Authority says, after conducting 55 inspections over the course of more than a year.

the latest from encompass

We are hosting a webinar with Dun and Bradstreet on Wednesday, 5 June, around aligning customer and vendor due diligence through technology. Nick Ford will be participating in the webinar, which will explore the convergence in compliance and procurement strategic objectives and responsibilities, and how joined-up processes can accelerate progress towards the common objectives of reducing costs while streamlining third party onboarding.

You can book your place here.

On the blog this week, we looked at KYC utilities and how to plan for success and reach objectives. You can read it here.

Oli Parris also examined how process mapping is the starting point for effective KYC automated solutions here.

The world of Know Your Customer (KYC), compliance and financial crime never sleeps, and if your challenges are keeping you up at night let us help. encompass intelligently automates information and news discovery for KYC requirements for onboarding, event-driven refresh and remediation.

Driven by your internal policies, our platform automatically constructs corporate ownership structures, discovers beneficial owners, and in minutes screens all relevant entities and persons for regulatory, reputational and financial risk.