Brendan Le Grange

Now that an election has been called, hopefully the JROC regulators will use the purdah period to come up with a better plan for rapid progress on extending open banking. See our @Innovate Finance paper below #SmartData #openBanking

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MAS Issues New ‘Source of Wealth’ Guidance for FIs Monetary Authority of Singapore (MAS) sets out key risk principles that FIs should follow when designing policies to establish SOW of customers. https://lnkd.in/dmzGS-UQ

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Today the Bank of England's most recent guidance on model risk (SS1/23) becomes effective. https://lnkd.in/e_QntcTB There's lots of useful guidance in there for anyone working with models - not just banks! But it is also clear to see the struggle of regulators here and in other sectors: how should we regulate models? Can we really get a grip on model risks? Yes, we can evaluate models based on past data, but the future has a habit of not looking quite as much like the past as a mathematician would like it to. So, when the models are wrong but we still have to make decisions, how should we proceed? That's my research programme*. Model risk isn't necessarily quantifiable but it can be manageable. *My main application areas of interest at the moment are climate finance/insurance, disaster risks, and epidemiological modelling.

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Consumer Financial Protection Bureau Finalizes Open Banking Rules: Consumer Financial Protection Bureau has finalized rules to promote open banking, allowing consumers to control and share their financial data freely. This aims to increase competition among financial service providers and improve consumer choice. Industry Reactions: Traditional banks expressed concerns over data security and legal overreach, while fintech companies found the rules too restrictive. Nonetheless, data aggregators like Plaid welcomed the regulations for promoting secure data transfer. Impact on Payments: The rules could reduce reliance on credit card networks like Visa and Mastercard, potentially lowering transaction costs for merchants and consumers. #OpenBanking #ConsumerFinancialProtection #FinancialDataSharing #CompetitionInFinance #DataSecurityConcerns #FintechRegulations #SecureDataTransfer #PaymentInnovations #TransactionCosts #ConsumerChoice

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This will sound rude but sometimes reality bites. I won't get many likes for this and I'll get some fruity responses but I know the people who will be silently clapping. Off the back of the latest EBA missive on Fraud..... https://lnkd.in/eqfBqkxz Payment fraud is a problem that demands a co-ordinated technical solution. Regulation will not help you here...... All the regulatory policy statements and organsational policies and controls in the world will not stop the sea of payment fraud. There is a readily available step-change solution that is a technological one and it involves payment service organisations taking their heads out of their sand and effectively deploying the latest standards from W3C for WebAuthn, DID (Digital Identifiers) and VC (Verifiable Credentials) and and then layering these technologies into their journeys in the context of hardware Root of Trust. I'll be a step bolder and say that if you are the head of fraud in a payment institution and you are not currently evaluating these technologies then you are not doing your job properly.. There, I said it.... It's about establishing the minimum level of trust required for least privileged authentication with a customer and then layering on all your extra fraud controls on top of that. I discussed this not too long ago with a major UK payments provider.... their response 'We don't do anything until other banks have done it first'. And there you have it....a killer open standards framework already adopted by MS, Google, Amazon etc etc that organisations are afraid to use because they are too scared to roll the technology out... Fear of a technological change is not conducive to progress and will never move the dial......

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🚀 Introducing Allica Bank's SME deep-dive: "Accelerating Growth: Allica Bank's Innovative Approach in SME Lending" 📈 In the ever-changing landscape of digital banking, it's vital to grasp market adaptations and strategic foresight. C-Innovation's latest report examines SME dynamics, focusing on Allica Bank's rapid growth and innovative approach. The research offers a detailed look at Allica's journey, highlighting key milestones, strategic insights, and future prospects. 🔍 Key Insights: Allica's Growth Journey ● Licensing Foundation: Allica Bank's 2019 banking license laid the groundwork for growth, ensuring security, trust, and a strong organizational structure. ● Strategic Market Entry: Allica strategically rolled out products, from business mortgages to asset finance, prioritizing human relationships, tailored expertise, and powerful technology. ● Expansion into Full-Service Banking: Allica advances its full-service banking franchise, positioning its latest offering, the Business Rewards Account, at the core of its expansion Marketing Boost and Acquisition Strategy ● Marketing Boost: In 2023, Allica increased its marketing spend to £3.3m, launching the 'Orange Hat Bank' campaign and reaching 2,000 Business Reward Account customers. ● Acquisition Strategy: Acquiring AIB Group (UK)'s SME portfolio enhances Allica's lending capacity, boosting business development and maintaining an opportunistic approach to acquisitions. Market Dynamics & Competitive Landscape ● The landscape of SME lending is witnessing a significant shift, with challenger and specialist banks surpassing the big five for the third consecutive year. ● Digital banks and specialist lenders now hold a record 59% market share, providing £11bn more lending than traditional banks. ● Allica stands out as a leading challenger bank in SME lending, particularly with popular finance types like buy-to-let and commercial mortgages. ● Allica Bank outpaces competitors in recent SME lending growth. ● OakNorth maintains UK's leadership with a total lending balance of £5.3bn as of 2023. ● Allica has shown significant growth in customer numbers and deposits, reflecting its strong market position. ● UK neobanks thriving in SME lending show strong profitability and valuations, with Allica Bank reaching its first full-year of profitability just three years after starting SME lending. UK neobanks excel in SME lending, with Allica Bank standing out as a key player. Anticipate continued innovation and growth as competition heats up, transforming the SME lending market. 🔗 Get the comprehensive report here https://lnkd.in/dvZZsTXA. #deepdivecollection #DigitalBanking #FinTech #banken #financialservices #cinnovation #banque #banca #bankingindustry #startups #businessmodels #smes #profitability #smefinance #businessbanking

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Sharing some key thoughts on vulnerable customers which should be integral to an overall wellbeing strategy for banks. In today's financial landscape, UK banks face a critical challenge: effectively supporting vulnerable customers. The Financial Conduct Authority emphasizes the importance of this mission, providing comprehensive guidance to ensure fair treatment and adequate support for those in vulnerable situations. (Included the FCA Guidance Document in comments for reference). > Understanding vulnerability is key. It can stem from health issues, life events, financial resilience, or capability, and may be temporary, sporadic, or permanent. Banks must recognize this diversity to tailor their approaches effectively. > Technology plays a crucial role. AI and data analytics can help identify vulnerable customers and personalize their banking experience. However, it's essential to balance this technological approach with human empathy and judgment. > Inclusive design should be at the heart of product and service development. Banks must consider the needs of vulnerable customers throughout the entire product lifecycle, ensuring accessibility and avoiding potential harm. Offering multiple communication channels allows customers to interact in the most comfortable way for them. > Front-line staff are vital in this mission. Comprehensive training programs should equip employees with skills to recognize signs of vulnerability and respond effectively. Some banks have successfully established dedicated support centers for specific vulnerabilities. > Clear communication is crucial. Banks should review their communications to ensure they are easily understandable, avoiding jargon. Raising awareness about available support services is equally important, as many customers may not know what help is available. > Supporting vulnerable customers requires continuous evaluation and refinement. Banks should establish robust feedback mechanisms and use this information to inform improvement efforts. > While supporting vulnerable customers is fundamentally about doing the right thing, it's also a regulatory requirement. Banks must align their policies with FCA guidelines and use Management Information (MI) to monitor the effectiveness of their strategies. As the financial landscape evolves, so must approaches to supporting vulnerable customers. Banks that excel in this area will not only meet regulatory requirements but also build trust, enhance their reputation, and contribute to a more inclusive society. This ongoing journey requires commitment, innovation, and collaboration across the banking sector. #FinancialInclusion #CustomerSupport #BankingInnovation #VulnerableCustomers #regulation #UKbanking #strategy

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This week the FCA has published two letters to the CEOs of banks, building societies and payment / e-money institutions. The letters set out the FCA’s expectations relating to APP fraud reimbursement requirement, the role of the Consumer Duty and what firms can expect from the FCA through a data-led approach to monitoring progress. The letters ask CEOs to ensure that their firms have appropriate oversight, systems, and controls in place to comply with the requirements. The FCA’s expectations include: ✔ Anti-fraud systems and controls focusing on effective governance arrangements, controls and data to detect, manage and prevent fraud ✔ Capital and liquidity focusing on managing potential liability and the impact that may result from potential APP fraud reimbursement liabilities ✔ Consumer Duty - the FCA expects CEOs to ensure their approach to ‘on us’ APP fraud meets the obligations under the Consumer Duty. ✔ Communication - the FCA has reminded CEOs of their ongoing obligations to notify FCA without undue delay of any material changes in the firm’s circumstances, including significant systems and controls and/ or prudential issues. The FCA has flagged an issue regarding ‘on us transactions’ APP fraud reimbursement. The FCA highlights that consumers are unlikely to understand that the level of protection that a PSP provides against APP fraud may vary depending on the type of payment process used and that this will lead to poor consumer outcomes. Under the Consumer Duty firms are required act to deliver good outcomes for consumers. The FCA and the PSR will work together to monitor firms’ compliance with the PSR’s reimbursement regime. The FCA plans to publish final guidance on enabling a risk-based approach to payment processing, and a policy statement to GC24/5, by the end of 2024 https://lnkd.in/eg76S9UD Tom Salmond, FRSA Hemen Shah, CFE Katie Roberts Sachin Dean Abigail Viljoen Genevieve Marjoribanks Matthew Rogers Heather Alleyne Christopher Woolard CBE Alex Noble Matt Taylor Mohneesh Paranjpe Nina Driscoll Dan Cooper David Williams Simon Spencer Richard Monks Mduduzi Mswabuki Claire Hinchcliffe

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𝗞𝗲𝘆 𝗛𝗶𝗴𝗵𝗹𝗶𝗴𝗵𝘁𝘀: #UKFinance #Fraud - Fraud continues to pose a major threat to the UK and cause serious harm to individuals and society. - In the first half of 2024 just over £570 million was stolen in payment fraud as criminals continue to ruthlessly target people and try to deceive them into making payments or providing enough information to enable their accounts to be accessed or controlled. - Most fraud originates on social media sites and via telecommunications networks. It is here that most of the social engineering and harm takes place. - There is no one silver bullet and we know criminals will keep adapting. To stand the best chance of tackling fraud we all need to keep working to reduce the threat it poses.

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As we approach the 7 October in-force date for Authorised Push Payment Fraud rules, taking us into unprecedented new territory for liability in payments, we look at what impact this could have on competition and innovation, and the potential de-risking that could take place as a result. #appfraud #openbanking #payments #competition https://lnkd.in/eVnkDQUE

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🇺🇸 The Consumer Financial Protection Bureau has outlined the attributes required to become a recognised Open Banking standard-setting body in the US, to help stop incumbents from “squelching” startups. FDATA North America said: “We commend the CFPB for the detailed attributes laid out in this final rule, emphasizing the importance of balance, transparency, consensus, and due process." Rohit Chopra Steve Boms Richard Prior #openbanking #datasharing #financialdata #openfinance #financialwellbeing #financialservices #regulation https://lnkd.in/eAiewxpm

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The Financial Conduct Authority has announced today that it has fined CB Payments Limited, part of the Coinbase group and a UK-registered EMI, £3.5m for continually breaching its voluntary requirement not to onboard high risk customers. After the VREQ came into force, CB Payments Limited onboarded or provided services to over 13,000 high risk clients. Fundamentally, it seems to be a system problem with various systems that the EMI used not being properly updated or configured to comply with the conditions of the VREQ and, as ever the case, a failure to document things properly. It's the first time the FCA has used its enforcement powers under the EMI Regulations and its first in relation to crypto activity so a pretty big day! As ever, the final notice is well worth reading. https://lnkd.in/e-F5bUu4

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More excellent news regarding the progress of open banking in the UK as the #CMA officially confirms the completion of the Roadmap for Open Banking. With this accomplishment on top of the number of UK consumers and small businesses using open banking technology reaching 10 million this summer, adoption still accelerating, and the Government preparing to introduce the Digital Information and Smart Data Bill, we can expect to see the benefits of open banking having an even greater positive impact on stakeholders and the economy. Congratulations to everyone who has delivered this major achievement. Finexos looks forward to continuing to contribute to the driving of innovation in financial services using open banking capabilities and helping to realise the many benefits they bring. Read more here: https://lnkd.in/eZSAKjvJ #openbanking #openfinance #smartdata #industry #fintech #regulators #policy #consumers #SMEs #credit #AI Open Banking Centre for Finance, Innovation and Technology (CFIT) Innovate Finance Open Banking Excellence (OBE)

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Some Insights From Being a Chief Compliance Officer in  Fintech EMI and Payments Institution. Being a Chief Compliance Officer (CCO), Money Laundering Reporting Officer -MLRO  in Fintech, with experiences cutting across the UK, EU, North America, Austrac, Middle East East and Africa particularly in an Electronic Money Institution (EMI) or Payment Institution (PI), FCA regulated and the other regions i have mentioned in my intro involves navigating complex regulatory landscapes, ensuring the business complies with all applicable laws, and mitigating risks associated with financial crime. The role is strategic, highly responsible, and crucial for maintaining the trust of regulators, customers, and stakeholders. Here is an overview of the key responsibilities, challenges, and strategies for success as a CCO in a Fintech EMI or Payment Institution: 1. Key Responsibilities of a CCO in an EMI/Payment Institution a) Regulatory Compliance Management Oversee Compliance Framework: The CCO is responsible for developing, implementing, and overseeing the company’s compliance framework to ensure alignment with regulatory requirements from the Financial Conduct Authority (FCA) and other relevant bodies. Licensing and Authorisation: Ensuring that the business adheres to the conditions set forth in its EMI or PI license, such as safeguarding of client funds, capital requirements, and risk management. Stay Updated with Regulatory Changes: Continuously monitor changes in financial regulations (such as EMR,2011, PSR,2017, PSD2, GDPR, and AMLD5) and ensure the business adapts its compliance programs accordingly. b) Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) AML Policies: Establish, maintain, and regularly update robust Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) policies to ensure compliance with the Money Laundering Regulations 2017 and Proceeds of Crime Act 2002. KYC/Customer Due Diligence: Ensure that Know Your Customer (KYC) processes are robust and in place for effective customer onboarding, including enhanced due diligence (EDD) for high-risk clients. Transaction Monitoring: Implement systems to monitor, detect, and report suspicious transactions to the National Crime Agency (NCA) via Suspicious Activity Reports (SARs). c) Data Protection and Privacy (GDPR) Ensure that the firm complies with the General Data Protection Regulation (GDPR), with emphasis on data storage, customer consent, data breach response, and right-to-access processes. d) Financial Crime Prevention Sanctions Compliance: Ensure compliance with sanctions regimes and conduct screening against lists such as the UK Treasury's Office of Financial Sanctions Implementation (OFSI). Fraud Prevention: Implement fraud detection tools and strategies to mitigate risks associated with fraudulent transactions, especially in real-time payment environments. Continue in my next post.

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Fast payments can help consumers improve their cash flow, but the speed and irrevocability of these payments also make them a target for fraudsters seeking to commit authorized push payment (APP) scams. My latest Payments System Research Briefing discusses measures that fast payment system operators and participating financial institutions can adopt to combat APP scams in fast payment systems. https://lnkd.in/gNXnjzX6

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✨EU BANKS SUBJECT TO NEW RULES ON DIGITAL ASSET HOLDINGS✨ This month, the European Banking Authority (EBA) published its final draft of a new technical standards package for the European Union banking sector, which includes a slew of additional requirements governing banks’ ability to hold digital assets. These new standards have been adopted by the European Parliament to align with the Basel III reforms introduced by the Basel Committee on Banking Supervision (BCBS) in the aftermath of the 2007-2008 global financial crisis. The BCBS is a committee of global banking supervisory authorities established by the central bank governors of the G10 to issue and maintain international banking standards. The Basil III reforms were intended to strengthen the resilience of the banking sector. Among the changes included in the reforms was an increase in the minimum capital requirements for banks to ensure they are sufficiently able to withstand losses in times of turmoil. It also includes an overhaul of the BCBS’ risk-weighted framework, which assigns a weighting to assets based on their risk which is then used as the basis for determining how much capital a bank must have in reserve relative to the holdings of the asset. Once agreed by the BCBS, new standards are left to its member states to implement. For the EU, these implementations are known as the CRR3/CRD6, and the specifics were published this month. Perhaps most significantly, under the new EU standards, ‘cryptoasset’ exposure is assigned a risk weight of 1,250%, and a bank’s exposure must not exceed 1% of its core assets. The exceptions to this are asset-referenced stablecoins (in other words, stablecoins that are pegged to other assets as defined by Europe’s Markets in Crypto Asset regulation), which are weighted at 250%, and tokenized traditional assets including e-money tokens. Notably, the requirements adopted by the EU are stricter than those mandated under the Basel III reforms. For example, the Basel III reforms set a 2% upper limit for banks digital asset exposure as opposed to the 1% implemented by the EU. Larger banks will also be subject to additional reporting requirements for their digital asset exposures. Each year, banks must disclose to regulators their direct and indirect exposure to digital assets, risk exposure, a description of the bank’s risk management policies related to digital asset exposure, and more. The new EU standards will become effective from January 2025. Spartan International Executive Search Spartan International Group Oliver Rolfe https://lnkd.in/edrNeyMy

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🔍 Addressing the Hidden Gaps in Open Banking Regulations for U.S. Financial Institutions 🔍 Open Banking regulations aim to integrate Fintechs with financial institutions via APIs. However, the connection to specific core banking instances remains complex. Major core providers like Fiserv, FIS, and Jack Henry are moving towards open platforms, but their APIs require specific licensing and robust integration platforms. Explore how these challenges impact small to mid-market FIs and what can be done to ensure a competitive and consumer-centric banking ecosystem. 📖 Read the full blog by Tarre Kroft, MBA, Solution Architect, Sandbox Banking https://lnkd.in/eWeN5Fk2 #OpenBanking #Fintech #BankingInnovation #FinancialTechnology #SandboxBanking #APIIntegration #CFPB1033 #ConsumerProtectionFinancialBureau

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