Central Bank Innovation Hub Update 2022
On 21 March 2023, the Central Bank of Ireland (“CBI”) published its yearly update on the operations of its Innovation Hub (the “Hub”) (here). Launched in 2018, the Hub serves as a forum through which firms innovating in financial services can engage with the CBI outside of formal regulatory processes.
Summary of 2022 Activities
According to the CBI’s update, firms in 2022 continued to show “strong interest” in the services of the Hub. The Hub, last year, engaged with 56 firms in total, and with stakeholders across a range of sectors. Firm engagement came from ventures at the early start-up stages to large global firms. Over 40% of all queries made to the Hub regarded preliminary enquiries as to formal regulatory approval processes. The year also saw an increase from 2021 in regulated firms engaging with the Hub, as well as significant engagement from firms which had previously utilised the Hub’s services.
Discernible Trends from 2022 Engagement
The following trends from 2022 are identified in the CBI’s update:
- Significant Interest from Digital Asset Providers
A plurality of enquiries made to the Hub in 2022 came from firms operating in the digital assets sector, including from crypto and blockchain providers. Many enquiries concerned the VASP registration regime. Others involved topics such as e-money authorisation and MiFID requirements. There was also an increase in the number of queries made to the Hub by large, established crypto asset providers.
- An “Engaged and Innovative” Payments Sector
The Hub received significant engagement from firms in the payments sector, accounting for 31% of all queries. This, according to the CBI, indicates an “engaged and innovative” payments sector.
- Growing Use of Technological Solutions in Financial Services
Hub Engagement by Regtech firms largely focussed on AML/CFT and other fraud prevention solutions. Many of these solutions incorporate AI or machine learning techniques. According to the CBI, this engagement highlights the increased prevalence, and evolving importance, of technological innovation in financial services.
Comment and Next Steps
According to the CBI, firms in 2022 displayed “strong interest” in the services of the Hub. In 2023, the CBI intends to continue to engage with innovators through the Hub, as well as through outreach activities.
There is scope, according to the CBI, to bolster the Hub’s engagement model, to facilitate further dialogue with innovators, and deepen CBI awareness of trends regarding innovation in financial services. In 2023, the CBI plans to issue a public consultation on proposed enhancements to the Hub’s model. The CBI states that any changes will be implemented by 2026, in line with the CBI’s current strategic cycle.
Also contributed to by David O’Keefe
This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.
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