A UK Banking Sector View: British Bankers’ Association (BBA) Members Feedback

 In Case Study, Participant


“The BBA is the leading trade  association for the UK banking sector with 200 member banks headquartered in over 50 countries with operations in 180 jurisdictions worldwide. The BBA’s members participated, both individually and at industry level, throughout the Industry Sandbox Consultation process to determine the feasibility of an Industry Sandbox. The BBA welcomes the opportunity to support the growth  of the UK’s FinTech sector and note that any models which encourage increased competition and technology innovation ultimately benefit our customers.

The BBA focused on four key points in their response to the Industry Sandbox Call for Input:

1. Importance of voluntary participation: in order to be successful in the long term an Industry Sandbox would need to be a market- led solution with participation and funding achieved on a strictly voluntary basis. The appetite of firms varies based on internal factors including the status of their existing work on innovation, the location of their research facilities and the funding allocated to testing activities. The BBA anticipates a varying level of participation amongst its member banks.

2. Avoidance of duplication with ongoing data-related initiatives: an Industry Sandbox is likely to achieve the highest level of participation if it focuses on adding value beyond  what can be achieved by in-house or existing industry-led accelerators and regulatory sandboxes. The involvement of the regulator, subject to the specific details, could be a key differentiator in this area, as could the focus on industry wide (‘wicked’) problems.

Where necessary, the BBA encourages the use of synthetic and publically available market data  as an initial case for an Industry Sandbox. The use of customer data, even in an anonymised format  would be prohibitively difficult and costly to include in an early form of an Industry Sandbox.

Where BBA members do see potential is in the role of an Industry Sandbox as a facilitator of experimentation between large institutions and startups or between multiple firms addressing a shared problem. Such collaboration can be frustrated by the contractual and legal questions surrounding shared work such as IP or, often, data  protection/sharing concerns. The establishment of a forum to address these issues, or even the establishment of a venue for engaging in such questions, could benefit innovation in the industry overall.

3. The need for further clarity of funding requirements and other requirements: The view of the BBA’s members is that in the short term, a low-cost, low-impact model is the most appropriate starting point. One important consideration is the source of this funding within the industry. In the case of the BBA’s members, funding for participation will come from existing innovation budgets. This means that resources for an Industry Sandbox are only justifiable to the extent  that they add value beyond what could be achieved through increased funding to existing accelerators/incubators or through in-house testing.

4. The role of the regulator: The Call for Input correctly identified the potential for an Industry Sandbox to serve as a place for an exchange of information related to new technologies under development or consideration and as a way to provide engagement early in a product lifecycle. These would be helpful developments in the effort to industrialise the process of technology adoption in financial services. BBA members are also clear that this should not be the sole source of education and information exchange between the regulator and industry.

The full BBA response to the Industry Sandbox Call for Input is available in Annex 6.


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