Bank of England jumps on the fintech accelerator bandwagon
The Bank of England (BoE) will launch its own fintech accelerator to harness innovation for central banking.
Fintech firms will be invited to carry out a proof of concept with the BoE. The bank will then act as a reference site for these companies.
The BoE says it “will offer firms the chance to demonstrate their solutions for real issues facing us as policymakers, together with the valuable ‘first client’ reference that comes with it.
“With time, the accelerator will build a network of firms working in this space for the benefit of us and them alike.”
The bank is interested in the areas of data anonymisation, cyber security and distributed ledger technology (blockchain), machine learning, data protection and data analysis.
One of the “big four” consultancy firms, PwC, has already done some work with BoE of the distributed ledger trial.
The BoE governor Mark Carney states: “Fintech has the potential to deliver more resilient financial infrastructure, more effective trade and settlement, and new ways to encode, share and analyse data.
For the financial sector, these could offer shorter, speedier transaction chains; greater capital efficiency; and stronger operational resilience.
“For consumers, they could mean more choice; better-targeted services; and keener pricing.
“For everyone, fintech may deliver a more inclusive financial system, domestically and globally; with people better connected, more informed and increasingly empowered.”
However, he emphasises that the transition will be a “reformation”, not a “revolution”. It will create a “a more diverse, resilient and effective system for consumers – one where large banks exist alongside new entrants who compete across the value chain.”
The aforementioned accelerator and the work around blockchain/distributed ledger tech are two of five action points on the BoE plan to help fintech start-ups. Here are the other three:
- providing them with the access to the central bank’s payment settlement systems, currently restricted to 48 big firms;
- being open to start-ups looking to use the central bank’s payment settlement service for securities and stock transactions;
- taking a reasonable regulatory approach to the new sector. “Fintech should neither be the Wild West nor strangled at birth,” Carney comments.
“With time, fintech could mean a more open, more transparent, and more democratic global financial system,” he concludes.