New boost for crypto innovation is good news for consumers

Posted: 5 July 2018 11:55 am

Innovative crypto and blockchain firms have been given a boost so they can test new products, services and business models to see if they can improve the lives of consumers.

The 29 businesses chosen to begin testing what is called the 4th Cohort of Regulatory Sandbox, will now be able to pursue the joint aims of cutting costs and time-to-market, as well as identifying “appropriate consumer protection safeguards” to be built into their products.

The initiative is sponsored by the Financial Conduct Authority (FCA), among the most important regulatory agencies in the UK. Of the firms chosen, 40% are blockchain related. The FCA says the intention is to see if, in a controlled environment, the benefits of blockchain’s distributed ledger technology can be delivered while also managing any associated risks. Without blockchain, cryptocurrencies could not exist in their current form.

A sandbox is a safe space for financial services firms to test new products and services. The aim is to reduce regulatory restraints – while making sure that customers and cryptocurrency investors are protected. Being accepted for the 4th Cohort of Regulatory Sandbox will enable those financial services businesses to trial innovative new delivery methods and approaches for cryptocurrencies.

It’s good news for all the selected firms, but especially the traditional, longer-established businesses, which have been set back by young fintech firms that use emerging technology to disrupt and innovate. While disruption can be good for consumers, it has put some of the established firms at a disadvantage.

Being part of this sandbox helps existing firms become more agile and encourages them to adopt new technologies to deliver more customer-focused, effective products and services.

For example, one of the traditional firms accepted in this latest cohort is Community First Credit Union, a community-based Australian credit union established in 1959 (when it was attached to the Sydney Water Board). It is now hoping to keep up with younger fintechs by creating an identity token to support customers without traditional forms of ID so they can set up and access bank account services in the UK.

One of the newer fintech’s that has been chosen for the 4th Cohort is BlockEx, a London-based software business. Its team is working on a new service designed to revolutionise the bond market by using blockchain technology to provide a rapid, transparent solution for bond issuing and lifecycle management. BlockEx reckons that with easy, efficient processes the innovation can work for the £5 million to £50 million SME bond sector.

Meanwhile, another young London-based firm, Capexmove, is trialling new solutions aimed at solving problems of market access by substantially reducing costs, and making debt security issuance a possibility on their platform.

Award winning Creativity Software, a UK-based business focused on providing Location Based Services (LBS) that enable consumers to check in at venues like restaurants and coffee shops, will use this opportunity to develop geolocation technology to better protect UK bank customers from crime, including fraud when using their mobile phones.

Also participating is Dashly, a mortgage broker that provides a free, web-based service for UK consumers that enables them to keep track of all their mortgage, property and insurance products. They will be using this new opportunity to further develop a fully autonomous mortgage advice platform that will compare a borrower’s mortgage to the competitors and alert them the moment it could pay to switch. You can find the full list of 29 firms and what they are planning here.

Blockchain technology is at the root of the future of finance, and cryptocurrencies have been key to this future since 2009. Check out finder’s complete guide to cryptocurrencies. And if you want to find out how to potentially make money on bitcoin have a look at our guide.

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