creative destruction ’. it may lead to new business models and new configurations within financial services. the potential of financial technology the potential of fintech is well described in one of the earliest reports on fintech commissioned by the uk4 treasury. this report is useful in that it outlines how countries can positively position themselves in relation to fintech. a key finding of this report is that a country could establish a well - functioning fintech ecosystem and competitively position itself provided that a holistic view is taken that focuses on the following four core ecosystem attributes : policy, talent, capital and demand. policy refers to the following : ( i ) regulatory regimes, which includes regulatory support for new entrants and innovative business models ; group of twenty united kingdom page 2 of 11 ( ii ) government programmes, including sector - growth initiatives which, in turn, include efforts to open up the sector, increase competition, attract foreign fintechs, and improve cyber - resilience ; and ( iii ) taxation policy, which refers to the introduction of appropriate incentives to drive greater investment in fintech, but, dare i add, should also include revisions to the tax code to ensure that profits generated are included in the taxation net of this nascent sector. while clear and appropriate fintech policies are important catalysts to innovation, without talent and capital, fintech is likely to grow at a slower pace. talent refers to both the availability of technical, financial sector and entrepreneurial talent as well as the strengthening of the talent pipeline through immigration policies and the promotion of fintech in schools and universities with specialist modules, apprenticeships and sponsored work placements. capital refers to access that start - ups and scale - ups should have to seed and growth capital as well as to public capital markets. the report, for example, lists investor - focused programmes such as the sponsorship of events for venture capital funds to meet early - stage fintechs and the creation of a growth capital fund to finance fintechs. last, but not least : although each of the previous factors is necessary for the emergence of fintech, actual demand relates to the end - client demand across consumers, corporates and financial institutions. governments can play a significant role in promoting the adoption rate of fintech through the modernisation of payment and supply chain solutions. although demand is not a prerequisite, without it innovation in financial services is likely to take off at a slower pace. this framework lays the foundation for developing fintech, especially at a time when

in the european union ’ s ( eu ) fintech action plan, one of the explicit goals is enabling innovative business models to scale up across the eu region through clear and consistent licensing requirements. actions include reviewing regulation on investment - based and lending - based crowdfunding service providers for business. the proposal specifically aims to ensure an appropriate and proportionate regulatory framework, which allows crowdfunding platforms that want to operate cross - border to do so with a comprehensive ‘ passporting ’ regime under unified supervision. another action that supports innovation includes a review of the current authorising and licensing approaches for innovative fintech business models. the european commission will set up an expert group to assess whether there are any unjustified regulatory obstacles to financial innovation in the eu ’ s financial services regulatory framework. page 6 of 11 authorities should therefore not merely acknowledge or observe innovation but should actively review fintech innovations ( including those with new business models ) with a view to ensuring proportionate and consistent authorising and licensing regimes. this practice is driven by an underpinning open philosophy and a flexible approach to fintech. speakers and participants who have had experience of this approach in other jurisdictions will tell us more about the impact of this practice. we will hear how initiatives in cryptocurrencies, digital identity and digital mobile wallets may benefit from a pro - innovation philosophy. we will also hear from jurisdictions with smart nation policies about the importance of such national philosophies and policies. of course, as authorities, we will need to ensure level playing fields and manage the risk of regulatory arbitrage. this is why a coordinated multiple regulator approach is so important. practice 2 : the creation of innovation facilitators such as hubs and sandboxes to keep close to emerging developments and foster shared learning the second practice is the review and creation of structural mechanisms to enable ongoing market engagements. these include efforts aimed at collecting fintech data, organising market outreach initiatives, and implementing structures such as innovation hubs, innovation accelerators and regulatory sandboxes. each of the reports strongly encourages shared learning with a diverse set of private - sector parties. in order to support the benefits of innovation through shared learning and through greater access to information on developments, authorities should continue to improve communication channels with the private sector and should continue sharing their experiences with innovation hubs, innovation accelerators and regulatory sandboxes, besides other forms of interaction. the reports suggest that the successes and challenges derived from such approaches may provide fruitful insights