IA launches Innovation Unit as Engine celebrates five-year anniversary
The IA has a long-standing commitment to innovation, and over the last few years we have been working at pace to drive forward our agenda in this space. In ‘Investing for the Future: Three potential paths for a tech-powered UK fund industry’, we outline the concept for Investment Fund 3.0, a vision of what funds could look like in the future, as our industry continues to prioritise keeping up with ever-changing investor and societal expectations. As part of this agenda, we have been working with a range of stakeholders to enable the first tokenised funds in the UK. I have also recently been appointed to the FCA’s new Innovation Advisory Group and will work closely with the other members of the group to identify opportunities for innovation in financial services and ensure collaboration between our industry and the regulator.
This year, we are pleased to announce the creation of the IA’s new Innovation and Operations Unit. The Unit will provide a strategic focus for our work in tech-related areas like tokenisation, artificial intelligence and cryptoassets, and support the wider innovation agenda we are committed to. Perhaps most importantly, it will provide a framework, strategic direction and coordination across our many extensive policy areas.
The tokenisation of mainstream assets, like shares, bonds, property and other infrastructure and native digital assets will use blockchain technology for its core functions, and we are increasingly confident that blockchain will prove transformative for delivery across the value chain. On the other hand, there is some uncertainty about how the native digital assets environment will evolve, with it likely to be different depending on the kind of assets. A clear policy and regulatory approach will be key to its success.
Crucial to our work in this space is engagement with stakeholders across the industry. We will be working closely with policymakers to embrace and facilitate innovation as the dial moves forward at an ever-quickening pace, while also deepening our understanding of the policy view on emerging technology. As part of this, we will work closely with the sell-side and other stakeholders to develop and utilise tokenisation in different asset classes and investment products.
There is huge potential for a UK central bank currency to be revolutionary for investors, platforms and asset managers, and this is an area we are looking at closely, including making digital GBP the preferred means of settlement for digital assets. Key to this will be our engagement with the Bank on the expected policy proposals, which will realise the benefits of a sovereign digital currency in cashflow throughout the value chain. We are continuing to advocate for a responsible widening of the regulatory perimeter to take in additional types of cryptoassets, and important reforms were outlined by HMT just this week. Consumer protection is paramount and a clear policy and regulatory approach to this area of the market is important as well as being able to positively frame the benefits of diversified mainstream investment.
And of course, at the heart of what we do is supporting our members firms, and our new Unit will support our members to create ways to better serve consumers as their requirements evolve, through changes to products and services and in ongoing engagement and communications.
This year we are also celebrating the anniversary of Engine, our FinTech hub and accelerator. For the last five years, Engine has played a key role in driving forward our innovation agenda through supporting investment managers to unlock new opportunities though cutting-edge technology. Through the SPARKS and Innovator programmes, Engine has worked with 29 FinTechs, helping them to accelerate their immersion in the industry. And in total, we have worked with over 150 FinTech firms, enabling them to raise awareness of their solutions, further develop their offerings and support the growth of their business. Engine takes a truly international approach, with FinTech firms based around the world, and we have established a global partner programme through which we have partnered with 10 different countries.
We have even partnered with two firms to provide services to consumers and the wider funds industry – via the IA Unclaimed Assets Portal with Gretel and the IA Common Shareclass Register powered by Fundipedia.
At this year’s EmTech Global, our flagship tech conference, we will explore the future of investment management through our 2023 theme – innovation, disruption and adoption. We will hear from industry leaders on the national and global outlook for FinTech investment, collaboration and regulation, the key challenges and opportunities in this space, what FinTech means for the next generation and growing role of tokenisation in investment management. We will also announce the five latest FinTech firms joining our Innovator Programme who will receive direct industry feedback and opportunities to work with industry participants.
The Edinburgh Reforms announced in December and the Financial Services and Markets Bill highlighted how crucial innovation is the UK’s competitiveness and position as a leader in financial services. We are looking forward to engaging with our members, regulators and Government to ensure we continue to be a world-leader in this space, ensuring that our industry is one that serves investors, businesses and the wider economy.
