The Bank of England proposes to open Britain’s payments system to businesses that wanted to compete with banks, the head of the central bank, as part of an effort to boost the financial technology sector.
Mark Carney BoE Governor said “The Bank is also setting up a unit to work with financial technology firms to tackle central banking problems in areas such as data protection and analysis, including spotting inconsistencies and patterns in huge sets of data”. More than 1,000 non-bank payments providers currently serve clients, but they have to rely on just four banks for access to high-speed payments through UK’s real-time gross settlement system.
Letting more Firms to settle transactions using money held at the central bank should bolster financial stability and enable more efficient payments Appropriate standards will need to be set for new settlement account holders, and legal changes will be needed, too. The central bank has been working more closely with financial technology firms to better understand the potential risks for financial stability from their growing importance in the banking system.
Consulting firm PwC said it had been involved in a pilot project with the BoE to look at distributed ledger technology, which underlies payment systems such as Bitcoin and gives users a single shared view of how a security has been traded.
Britain accounts for about half of European financial technology start-ups, which use technology ranging from cloud data storage to smartphones to provide loans, insurance and payment services as well as more business-focused needs.