Jersey’s A-Z of Fintech

AI makes it possible for machines to learn, react, and perform certain human like tasks. Many types of AI exist; they are typically classed by how ‘intelligent’ they are, what they do, and the practical application. In financial services the primary use cases are in improving products such as robo advisors, ways of serving clients such as chatbots, using data analytics to manage risk, or using machine learning and pattern matching tools to assist with KYC and AML obligations.

Find out more in our CEO’s blog, ‘Artificial Expectations or Intelligent Opportunities?’

Did You Know?

PwC estimate the potential contribution to the global economy from AI could reach $15.7tr by 2030.

Cryptocurrencies are also known as virtual currencies. In 2014, the European Banking Authority defined cryptocurrencies as “a digital representation of value that is neither issued by a central bank or a public authority, nor necessarily attached to a fiat currency, but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically”. Bitcoin was the first, and remains the most well-known cryptocurrency and it accounts for over half the market of all cryptocurrencies. There are estimated to be more than 2,000 known cryptocurrencies in existence with a total market capitalisation of more than $100bn in 2018.

Did You Know?

In 2014, Jersey was the first jurisdiction in the world to successfully establish a regulator-approved Bitcoin investment fund. In 2017, what is believed to be the world’s first regulated, crypto-denominated fund was launched.

Electronic or ‘e-signatures’ are digital representations of an individual’s signature or a unique value such as a fingerprint, which is used by the individual to sign for goods and services including contracts. Electronic and digital signatures are often used interchangeably but digital signatures differ as they additionally use digital encryption which demonstrates proof of signature by the authorised party.

Find out how, Electronic Signatures are covered under the Jersey Electronic Communications (Jersey) Law 2000.

Did You Know?

In the EU, 700 million transactions were performed using electronic signatures in 2017.

The Global Financial Innovation Network (GFIN) was formally launched in January 2019 by an international group of financial regulators and related organisations, including the Jersey Financial Services Commission. The GFIN seeks to provide a more efficient way for innovative firms to interact with regulators, helping them navigate between countries as they look to scale new ideas. This includes a pilot for firms wishing to test innovative products, services or business models across more than one jurisdiction. It also aims to create a new framework for cooperation between financial services regulators on innovation related topics, sharing different experiences and approaches.

Find out more about Jersey’s involvement in GFIN.

Did You Know? 

GFIN is a network of 29 organisations from across the globe who are committed to supporting financial innovation in the interests of consumers.

The IT infrastructure which underpins any business. Technology infrastructure in financial services (such as that found in front, back, and middle offices) is the enabler for digital products and services. Technology will vary by firm but will be influenced by client demands, which are generally moving towards real-time information and consolidated portfolio views. In 2018, Jersey completed the full rollout of its high-speed fibre broadband infrastructure to every home and business on the Island. Jersey has three 4G mobile networks and is home to four data centres providing robust IT infrastructure which enables financial services firms to deliver digitally.

Find out how Jersey’s connectivity and network infrastructure enables innovation in financial services in our research paper, ‘Jersey for Innovation in Finance: Ready to Support Global Success’.

Did You Know?

Jersey ranks 3rd in the world in the 2018 Worldwide Broadband Speed League, ahead of countries such as Japan, Estonia, Hong Kong, the United States, UK, and Malta.

KYC relates to the process by which regulated firms, such as banks and trust companies, comply with their regulatory obligation to verify the identity of their clients as part of Anti Money Laundering requirements. Fintech is supporting this crucial process of KYC. For example, advances in technology such as machine learning and biometrics allow firms using fintech solutions to obtain a greater degree of certainty when undertaking KYC checks.

Find out about Jersey KYC and AML requirements.

Did You Know?

10% of the world’s top financial institutions spend at least $100 million annually on KYC compliance checks. 

Machine learning identifies patterns within data and ‘learns’ to make statistical driven recommendations or take action. In financial services, the primary uses are to detect and prevent fraud, and to identify insights in data. For example, in reviewing large volumes of transaction data to detect ‘smurfing’ fraud, to assess the performance over a loan book over a given period of time to allow corrective action to be undertaken, or as part of a hybrid robo/human advice proposition in the wealth management industry. 

Find out about Machine Learning and AI in our CEO’s blog.

Did You Know?

Netflix saved $1 billion in 2017 as a result of its machine learning algorithm which recommends personalised TV shows and movies to subscribers. Users are now far more satisfied with suggestions meaning they are less likely to abandon Netflix in favour of alternatives.

Open banking is an initiative designed to boost competition and the variety of products in the banking, credit cards, and payments space. Financial institutions must securely ‘open’ their client data to approved third parties that the clients explicitly opt in to as they wish to use open banking products and services. In the UK, the nine largest banks (Allied Irish Bank, Bank of Ireland, Barclays, Danske, HSBC, Lloyds Banking Group, Nationwide, RBS Group, Santander) are mandated by the UK Competition and Markets Authority to allow open banking access. In Jersey, there is no open banking framework and a watching brief is being maintained on the success of Open Banking in the UK and local demand. Under Jersey law, there is no barrier to banks negotiating individual open banking style standards and contractual terms with third parties.

Did You Know?

PwC estimate a £7.2bn revenue opportunity will be created in the UK by open banking by 2022.

We are proud to work with the States of Jersey, Digital Jersey, Skills Jersey, institutions from Jersey’s education system, and private sector firms as part of the Digital Skills Partnership, which works together to make Jersey’s workforce future proof. The Digital Skills Partnership has identified software engineering, maths/logic, emerging technologies, data structures/algorithms, programming, and digital creativity as the digital skills of the future. Individuals in Jersey can undertake qualifications in these skills with courses available to school leavers, career changers, redeployed staff, and those seeking to upskill knowledge.

Find out about careers and qualifications in finance.

Did You Know?

Jersey has a dedicated Digital Skills Strategy which provides a road map that spans both employers and education, creating clear objectives, and laying the foundations for a successful local digital-tech workforce.

A fintech or regulatory sandbox refers to a collaborative approach to developing regulatory frameworks, business models, or innovative software between a financial services firm and a regulator. Not all sandboxes are created equally, with many aligned to the predominant financial services sector in a particular country. For example, a country with a large retail banking sector may focus on development of personal finance regulation with strict sandbox criteria whereas a country focused on cross-border international finance may work closely with firms to apply bespoke conditions of activity. For many years, the Jersey Financial Services Commission has worked with applicants providing innovative products, to apply appropriate conditions or restrictions to ensure adequate consumer protection without stifling innovation. 

Find out what Jersey is doing.

Did You Know?

Since 2016, Jersey has had a regulatory sandbox approach for financial services and it has operated an innovation hub, providing targeted help and support to innovative businesses. 

Unicorns are start-up companies that have achieved a valuation of over $1bn. Valuations are normally made during venture capital funding rounds. There are currently estimated to be 260 global unicorns, with 15 of these in the UK. Worldpay, a global leader in payments processing was founded in Jersey in the mid-1990s. With a current market valuation of just under $10bn Worldpay could be considered as Jersey’s first fintech unicorn. 

Did You Know?

In 2018, a new tech unicorn was created every 3.8 days in China. Since 2008, Jersey Finance has had a presence in China. To find out more about our activity in this market, contact An Kelles, Business Development Director – Greater China. 

Wealthtech is a subset of fintech that focusses on the private wealth and asset management industry. Technologies such as artificial intelligence can use market and client data to provide wealth managers with recommendations that better meet their client needs and risk appetite. Online only services such as robo advisors, digital brokers, and micro investment platforms are examples of wealthtech, which are opening up the investment market to a new set of clients. We continue to work with wealth management firms and the wider financial services industry to ensure the technology expectations of the next generation of wealth management clients are met. A wealth technology focussed working group collaborated to identify five future wealthtech priorities: immediacy of information, communication channels, robust information security, risk management tools, and data responsibility.

Find out what Jersey is doing.

Did You Know?

According to estimates by BI Intelligence, in the United States alone, the robo-advisor market will manage a trillion dollars by 2020 and $4.6 trillion by 2022. 

Younger demographics such as Millennials or Generation Z are often cited as the key users of digital financial services. Research suggests the majority of younger clients prefer self-service channels such as mobile banking or apps to manage their money and are often keen to undertake their own research on finance products. Younger clients are more likely to be influenced by and use social media to engage with their financial services provider. Millennials in particular, are more open to changing their financial service provider, and are more likely to use non-traditional financial services providers than previous generations.  

Did You Know?

Almost 90% of millennials check their smartphone within the first 15 minutes of waking.