As part of the Ontario Securities Commission’s “OSC LaunchPad” initiative, more than 120 members of the FinTech community were brought together in late 2016 to find solutions to capital markets regulatory problems. The results of this effort are described in the Ontario Securities Commission’s recent publication “OSC RegHackTO: Insights from Canada’s first regulatory hackathon”. “RegHackTO”, the first hackathon by a Canadian securities regulator, aimed at engaging with the FinTech community to better understand how technology could assist in the modernization efforts of the OSC and the financial services sector more broadly.
What is a “Hackathon”?
A hackathon is a design competition in which computer programmers and software developers collaborate on innovative technology projects. Culminating with competitors pitching solutions to a panel of judges, the OSC’s hackathon focused on four key problem areas:
- RegTech (automated reporting and insider trading detection);
- Know-Your-Client (KYC)/identity authentication;
- Financial literacy (advisor ratings and investor education); and
- Transparency in the capital markets (distribution pricing and fees; access to information).
The competitors worked on their solutions over a period of three days, November 25-27, 2016.
How Did The “Hackers” Do?
The teams, whose members included everyone from high school students to employees of major financial services firms, were judged on (i) the creativity of their solutions, (ii) how well their apps make regulatory systems more user-friendly and approachable and (iii) how well the apps work. There was no prize money, but Existence Labs – the first-place winner which came up with a KYC authentication solution using blockchain technology – was awarded a seat on the OSC’s inaugural FinTech Advisory Committee, established in January 2017.
In addition to gaining a better understanding of the technological development process, the OSC identified the following themes to be further considered by regulators:
- Technology is rapidly changing how financial services are delivered.
- Open access to data is essential for advancing FinTech solutions.
- Regulators must be open to new ways of doing business.
What Happens Next?
Going forward, the OSC plans to consider ways to leverage technologies for its regulatory work and support the facilitation of access to data where it fairly increases competition and provides tangible benefits to Ontario investors. Notably, the OSC will be looking for solutions to facilitate a centralized KYC information collection and verification process and will be open to members of the FinTech community presenting potential solutions to this problem.
For further information, please see OSC RegHackTO: Insights from Canada’s first regulatory hackathon (March 6, 2017) and our Insurance Group’s discussion of a recent report on FinTech developments in the insurance sector