12 April 2017

Mark Carney: Building the infrastructure to realise Fintech’s promise

FinTech’s promise springs from its potential to unbundle banking into its core functions of settling payments, performing maturity transformation, sharing risk and allocating capital. 

This possibility is being realised by new entrants – payment service providers, aggregators and robo advisors, peer-to-peer lenders, and innovative trading platforms. And it is being influenced by incumbents who are adopting new technologies to reinforce the economies of scale and scope of their business models. 

FinTech could deliver significant benefits to households and businesses across this country and across the world.  FinTech can widen access to financial services and bring new sources of credit.  It can connect customers better with their finances and empower them more in the process.  And new technologies can deliver faster service, greater choice and keener pricing.

As it does, risks will evolve.  Changes to customer loyalties could influence the stability of bank funding.  New underwriting models could impact credit quality and even macroeconomic dynamics.  New investing and risk management paradigms could affect market functioning.  

At the same time, the resilience of the system could also be built, through greater diversity in provision of financial services as well as increased redundancy.  A host of applications could reduce costs, improve capital efficiency and strengthen operational resilience. 

The challenge for policymakers is to ensure that FinTech develops in a way that maximises the opportunities and minimises the risks for society. 

The Bank of England will work with the market and other authorities to build the hard and soft infrastructure the system needs to support innovation and growth, consistent with the City’s best traditions. 

Full speech

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