How might regulation enable financial innovation to deliver a carbon-zero future?

“While these risks may form in full over time, they are becoming apparent now. Firms are enhancing their approaches to managing these risks, but face barriers to implementing the forward-looking, strategic approach necessary to minimise the risks. The CFRF aims to reduce these barriers by developing practical tools and approaches to address climate-related financial risks.”, Climate Financial Risk Forum

Climate change and society’s response to it presents financial risks and opportunities that are relevant across the whole financial sector. In the UK, this falls within the remit of the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) objectives.

At Icebreaker One, we are working with the FCA’s Climate Financial Risk Forum: Innovation Working Group (CFRF-IWG) to help shape potential areas for product innovation and the underlying data sharing that might enable it. The objective of the CFRF is to build capacity and share best practice across financial regulators and industry to advance our sector’s responses to the financial risks from climate change.

It has convened representatives from across the financial sector, including banks, insurers, and asset managers as well as observers to represent a broader range of firms and ensure the outputs of the CFRF are communicated.

Concurrently, I am working with the FCA’s team on Open Finance, which is exploring how the role of Open Banking might be built upon to include Investments, Pensions, Savings, Consumer Credit, Mortgages and General Insurance.

What is Open Banking and why is it relevant to Icebreaker One?

Open Banking is a regulated standard that addresses the sharing of sensitive data across the banking sector. It addresses:

• Rights
• Liability models
• Dispute resolution and redress
• Consent
• Security
• Legal frameworks
• Usability
• Logistics
• Technology architecture
• Operating principles

Open Banking was created by convening teams to develop common principles and practice for sector-wide data sharing. They included existing and challenger banks, trade bodies, fintechs, Treasury and regulators. In the UK, this led to the creation of an independent non-profit (funded by the banks) to develop and take the standard to market, with a directory of accredited organisations using it that now numbers in the hundreds.

Open Banking has created an open and safe marketplace for innovation

The standard was (and is) developed openly — as a result, it has helped to catalyse initiatives around the world. Similar initiatives now exist across Australia, Bahrain, Europe, Hong Kong, India, Japan, Mexico, Malaysia, New Zealand, Rwanda, Singapore and the USA.

Icebreaker One is building on this approach to help companies and regulators design and develop new financial products and services, with a shared set of principles and practice that are aligned with regulatory best-practice.

If you would like to get involved, join us today.