6th March 2019
What is the GFIN Trade Hub?
In 2018, the UK Financial Conduct Authority (FCA) proposed the creation of the Global Financial Innovation Network (GFIN), a collaboration between 11 financial regulators and related organisations with a common aim and vision to progress financial innovation and improve global prosperity. It is expected that the new global regulatory framework will be highly transparent, technology-led, and ideally fully automated with minimal bureaucracy. It is an international legal framework designed for a digital age of financial services.
The approach should optimise the effectiveness of participating firms and ultimately lead to a dramatic increase in productivity for participating markets which will filter through to greater prosperity for end users. It lays the foundations for a new and modernised, multinational financial system that will lead to job creation, innovation and economic growth. The proposed framework will be set to reduce financial crime, money laundering, fraud and tax avoidance through the use of technology.
The main barrier to entry to an international market for FinTech companies are the different regulatory obligations. The GFIN makes it easy for FinTech companies to trade seamlessly in participating markets with a specific focus on regulatory alignment which makes it easy for participating firms to navigate international jurisdictions.
Crowd2Fund has regulation and compliance at their core, and are set to target these new markets by rolling out their innovative investment platform for entrepreneurs. They are currently seeking local partners in GFIN markets to help expand the Crowd2Fund capability overseas.
“We have entered a new digital era where the GFIN trade hub lays the foundations for a very exciting and prosperous future” Chris Hancock, CEO and Founder says. “A solid FinTech cross-border regulatory framework is critical for international collaboration and facilitation of trade and will allow us to do business in a hyper-efficient manner going forwards.”
Alignment of FinTech Regulations
The GFIN market is currently in the test phase. Regulatory mapping could allow for the easy passporting of participating firms, leading to quicker or even automated regulatory approval when they enter international markets - something that has never been achieved until now. Cross-border trading will be a particular focus, where different jurisdictions can have different tax regimes, as transactions can be securely logged using technology, and reported back to relevant authorities in real time.
For marketing of financial products in non local GFIN markets, there needs to be consistency with how they are presented to users in different jurisdictions. There is significant alignment of global regulations already that apply to FinTech, such as user identification or anti money laundering checks and this initiative will further that.
Ensuring that the highest standard of appropriate regulations that stimulate rather than constrain progress will be an absolute priority to support the success of new FinTech firms in addition to ensuring the right regulations are implemented. If the regulatory ecosystem is architected correctly, participating markets will see stronger collaboration against online financial crime, corruption, money laundering and fraud – big hindrances for growing FinTech companies and the wider economies.
New technologies which drive the development of new regulations, such as blockchain, can be adopted more quickly and therefore support the growth of firms participating in this modernised financial system.
Governance and Audit
Our financial system is already hyper-connected but organisation is lacking and it is inefficient due to lack of modernisation. It is exposed to unnecessary risks, therefore, the opportunity for a new regulatory framework to provide an ecosystem to stimulate the development of a modernised financial system that is designed for a digital age offers huge benefits such as more transparency and efficiency. Blockchain could facilitate secure and transparent monitoring of transactions from an internal or cross-border perspective which would enable the tracking of transactions and also automatically calculating tax obligations.
If financial regulators and central banks adopt a standardised system, it could also allow participating firms to share transaction data. This would enable central operators and institutions to use Artificial Intelligence to monitor a firm’s activity to detect bad actors and transactions automatically - in real-time. Being highly efficient, automated, and technology-led is a core element to the framework, with a key objective to reduce fraud, money laundering, financial crime and corruption, thus allowing honest entrepreneurs and participating firms to prosper.
Blockchain could be used as a secure standardised approach to allow automated, geographically agnostic, custom checks and payments to appropriate tax authorities. In the longer term, the framework could even operate outside the financial service system and be applied to the regulation of other online platforms, such as social media and the trade of physical goods across jurisdictions.
The Advancement of the FinTech Bridge
Crowd2Fund are ahead of the curve: the FinTech bridge was established as a precursor to this, connecting the UK with Australia. As the first peer-to-peer lending platform to deploy this, Crowd2Fund are taking advantage of the benefits that the now wider-scale GFIN presents. Crowd2Fund will be talking about their plans and the opportunity GFIN presents globally on Friday 1st March in Sydney. If you’re interested in finding out more about Crowd2Fund’s growth plans then please get in touch on info@crowd2fund.com.
Key facts
- GFIN is 11 markets including: Australia, Bahrain, Bermuda, Canada, Hong Kong, Hungary, Kazakhstan, Lithuania, Singapore, Dubai, UK
- GFIN population is 181.9 million people or 35% of the population of the EU or 56% of the USA
- GFIN GDP is £6.75 trillion, 44% of the EU or 35% of the USA
- 50% of the world's top 10 financial centers are within a GFIN market
- Additional members are expected to join such as the USA, South Africa and other EU markets
References
https://www.fca.org.uk/firms/global-financial-innovation-network
https://asic.gov.au/for-business/your-business/innovation-hub/international-cooperation-and-referrals/global-financial-innovation-network-gfin/
