The government has launched a research initiative to address the development of distributed ledger technology, and has pledged £10m to support the development of financial technology (fintech).
Distributed ledgers help financial services firms handle identities, debts, contracts and transactions across the globe, and are commonly used to verify and authenticate digital transactions using virtual currencies such as bitcoin.
The government’s interest stems from the growth of digital currencies and fintech firms in the UK, as well as London’s continued status as the world’s premier financial services powerhouse.
Harriet Baldwin (pictured), economic secretary to the Treasury, announced the £10m of funding in a speech at the British Library about the £42m fund allocated to big data research at the Alan Turing Institute for Data Science and its benefits to the fintech sector.
She said that the £10m is an increase in funding dedicated to exploring the regulation of digital currency businesses but without running the risk of stifling innovation in the sector.
“To complement this work, the government has launched a research initiative which will bring together the Research Councils, Alan Turing Institute and Digital Catapult with industry to address the research opportunities and challenges for distributed ledger technology,” she said.
Baldwin explained that the development of distributed ledger technology stands to benefit the fintech sector in two areas.
The first is the fast, efficient and secure transfer of digital assets such as bonds and shares over the internet. And the second is the ability to ‘sign’ and ‘time stamp’ to maintain records of digital financial documents in a secure and efficient way.
“In other words, it’s all about making processes simpler and life easier,” said Baldwin.
She also announced the creation of the UK PhD Centre in Financial Computing at University College London which, in partnership with the Turing Institute, aims to teach people to become experts in high-performance computing, mathematical modelling and software engineering to equip them with the digital data science skills the fintech sector needs in order to grow.
“Data science is a new and exciting field. Its research translates into real societal and economic benefits. It is great news for the country that we have some of the future leaders of this area right on our doorstep,” said Baldwin.
Support for the PhD Centre will come from the London School of Economics and 20 major financial institutions, including Barclays, RBS and Citigroup.
The government’s support of the fintech sector is apt given the wealth of fintech startups in Tech City UK, and in other areas of the capital such as Ormsby Street which recently featured in the V3 Startup Spotlight.