The Bank of England is establishing a new Fintech Hub as a central point of contact for engagement with startups and to drive new technological developments within the Bank.
An extension of the Bank’s existing accelerator programme, the Hub “will sit at the heart of the Bank, to consider both how the Bank understands and how it applies fintech, relevant to its mission,” Dave Ramsden, deputy governor of markets and banking told a conference in London.
A member of the Bank’s Monetary Policy Committee, Ramsden believes that fintech could have a materially beneficial impact on the UK economy.
“The defining trend of the last ten years has been the weakness of productivity,” he says. “Given the size of the financial sector in the UK, I can see fintech driving competition and a pick-up in productivity in the medium term.”
The bank has run a number of Proof-of-Concept trials involving distributed ledger technology, RegTech, machine learning and cyber security from within its accelerator programme over the past year.
Says Ramsden: “We are now looking to build on the success of the accelerator by integrating its key approaches into our business as usual activities.”
Accordingly, the PoC approach is being applied to the Bank’s rebuild of the UK’s real-time gross settlement system. Ramsden says the Bank is working with a “small cohort” of firms to consider how the new payments system could be interfaced with innovative settlement systems, such as those built on distributed ledger technology.
“The Proof-of-Concept is designed to assess the demands placed on central RGTS infrastructure by a range of fintech firm’s settlement models rather than assessing the specific offering provided by a particular firm,” he says. “By allowing a range of system structures to access the new RTGS system, the Bank can support innovation in the private sector.”
Other experiments underway include the application of machine readable technology for regulatory purposes.
The Hub will also act as the focal point for firms to interface with the Bank, The Treasury and Financial Conduct Authority as they scrutinise the risks related to digital currencies and the potential benefits that could accrue from the underlying technology under the newly-mandated Cryptoassets Task Force.
“Investment in the UK’s financial technology is going to be an important factor in sustaining the UK’s global position,” Ramsden concludes. “With its open approach of considering, adapting to, and applying fintech across the breadth of its mission, including through its own investments, the Bank will play its part.”