Is the fear of regulation holding back innovation in the financial services sector?
‘Innovation’ has become a buzzword within the financial services industry in recent times. Often used as a slogan for success, it would appear that many consider the notion of innovation to be the be-all and end-all. And yet, it wasn’t too long ago that innovation and its associated risk (particularly in the mortgages and short-term debt sectors), paired with a lack of effective regulation, caused major economic problems right across the globe.
Fast-forward eight years and the UK seems to be in a much healthier position economically – standing as the world’s leading fintech centre, according to an independent report from Ernst and Young (EY) published in February. The UK is making efforts to learn from the mistakes of the past to benefit our growing digital economy. For instance, within the e-money market, the UK implemented the Electronic Money Regulations 2011 which has created clearer and more robust regulations and which may, in part, be responsible for the exponential growth of the UK’s fintech sector.