Jersey is a recognised leader in some areas of financial services and a hugely important part of the infrastructure that moves capital around the world.
I am occasionally asked about my vision for fintech in Jersey, which is to be much the same as the financial services industry.
I would like to see Jersey take its rightful place alongside similar jurisdictions as a place that provides innovative and sustainable fintech services and products to businesses all over the world – using a combination of local and off-Island talent, whilst creating a dependable pipeline of technology talent in the process.
The good news is we have a roadmap to achieve just that and we are focused on the journey described by that map, along with some interesting and unplanned detours along the way.
The not very good news is that making fintech a success in Jersey will be challenging and require a lot of hard work.
Jersey is of course not alone in that ambition but this should not mean it is overlooked. It means we simply have to work harder to differentiate ourselves wherever we can. Very few jurisdictions will be able to describe a closer or more collaborative relationship than we have between the various organisations responsible for making fintech a success in
Jersey and even fewer will be able to boast our incredible internet speeds.
Being a small island makes it easier to get around using your electric bike and experience less range anxiety in your electric car. More seriously, this means that it is very easy to facilitate discussions between the financial services and digital industries, together with government, regulator and other agencies as appropriate. However, Jersey’s size has not held it back in financial services and it should not hold it back in fintech – there is every opportunity to plug into existing global networks and ecosystems and learn from and collaborate with the world beyond these shores.
Of course, ‘digital transformation’ is one of those buzzword phrases we hear a lot these days but the interesting thing about the financial services sector, is that it has transformed itself many times over the years. As rules and regulations change around the world, the financial services sector has consistently innovated and adapted and has never buried its head in the sand.
In fact, Jersey was an early fintech innovator with the birth of global e-commerce with Worldpay in 1994. There is therefore every reason to believe that financial services businesses will, with the right help and in the right conditions, take full advantage of the opportunities afforded by digital transformation. In many cases this of course starts with a cold hard look at existing (non-digital) policies, procedures and processes rather than expect technology to solve all of those problems too. In a competitive environment such as Jersey, businesses are already adopting this approach, to maintaining and improving profitability and providing regulatory robustness, resulting in the best customer experience.
Jersey should be very proud of its fast and reliable network and connectivity and now is the time to really exploit and unleash its potential before other jurisdictions catch up.
Remote working, collaboration across sites and testing of new technology are all things this wonderful and virtually unique infrastructure allows. I am currently home working on a 1GB fibre connection. How many other places in the world can say that?
Having great infrastructure only gets us so far though – we also need the people who know how to work it. Jersey’s challenge to get the best digital skills are no different to other jurisdictions but we have the additional pressure of being a small island.
However, we are tackling this head on, together with reskilling of talent currently engaged in other areas, by the establishment of the Digital Jersey Academy. This dynamic space – right alongside the Digital Jersey Hub, our collaborative working space and Digital Jersey’s own offices – provides impressive lecturing, video and podcasting facilities. In a short space of time the Academy is already hosting a huge range of exciting learning activities, many led by industry themselves.
My personal view is that the industry is only beginning to explore the opportunities afforded by artificial intelligence – and by that I mean everything from Robotic Process Automation (RPA) upwards. Conversations are slowly evolving into projects but the pace needs to quicken. Similarly organisations are at different stages in organising their data to make best use of it. The trusts and companies at the heart of a large part of Jersey’s financial services industry are of course entities created by governing documents – such as trust deeds, articles and memorandum of association. How long before machine learning is able to ‘read’ those documents and operate the entities in accordance with the instructions therein. What will that mean for efficiency, risk management and fiscal rules? These are all questions that will need to be answered sooner rather than later. In addition, whilst Jersey has innovated in the past, given the pace of change in this area, it no doubt needs to accelerate to at least keep up in the future and go even faster to join the leading pack.
Other than artificial intelligence, there is obviously a massive range of other new technologies which could transform our existing financial services industry and, in some cases, create new services. Jersey has expertise in many such areas including cryptocurrencies, blockchain, data, cloud and information security. In many cases the regulatory position of these services will be unclear or require clarification as it develops. Jersey’s financial services regulator – the Jersey Financial Services Commission (JFSC) – is fully committed to innovation generally and fintech in particular, whilst of course doing everything it needs to do to protect and enhance Jersey’s excellent reputation. The JFSC was one of the first regulators globally to issue guidance around virtual currencies which has driven quality over quantity businesses to the Island. They work closely with Digital Jersey (in fact a member of their team is regularly stationed at Digital Jersey’s collaborative working space dealing with member queries one to one) and we operate a virtual ‘sandbox’ environment with them, whereby businesses can discuss with us and them, the regulatory aspects of their proposals.
Jersey’s tax system and lack of capital gains tax can be an attractive proposition for the right type of business. There are a growing number of startups in the fintech area, serving clients on and off Island – both in and outside of financial services – and they enjoy no corporate tax and low personal taxes in Jersey. Many of those startups have turned into scale ups and Digital Jersey have helped many of those with general support, office space, help with business licensing and many other issues. A number of those startups have been able to take advantage of the close proximity of an international financial services industry and are closely aligned to the industry’s needs.
The thread running through all of these initiatives is collaboration and it is worth mentioning how strong the collaboration is between all of the government departments and arm’s length organisations with an interest in this area.
Indeed Jersey Finance, Locate Jersey, Digital Jersey are now collaborating under a new common branding ’Jersey for Fintech‘. Together with the Island’s financial services regulator (the JFSC), the Jersey Information Commissioner (Jersey law incorporates all the applicable elements of GDPR to ensure that Jersey has a level of protection equivalent to that of the European Union) and government themselves, are all easily accessible and working closely together.
If we really are going to exploit the technology in financial services in Jersey, it is essential that we focus on the opportunities and not just the challenges. There are plenty of both.