Fintech

What is fintech and why are we interested in its impact?

Combining the words ‘financial’ and ‘technology’, fintech is technology-enabled financial innovation, which is changing the way financial institutions provide – and consumers and businesses use – financial services.

Although ‘fintech’ is a relatively new term, innovation has always been important in the financial sector. The key difference now is the pace and impact of change. This trend prompted us to develop the Future of Finance initiative, which explores how the financial system might change over the next decade, and what it means for our priorities now and in the future.

We are actively exploring how developments in fintech might support our mission to promote the good of the people of the UK by maintaining monetary and financial stability.

To embrace the potential of fintech we are:

Understanding how fintech developments may affect systemic stability

Understanding how fintech developments may affect the safety and soundness of firms

Applying fintech, where appropriate, to enhance our capabilities

Our Fintech Hub brings together all our work in this area. Sir Dave Ramsden, our Deputy Governor for Markets and Banking, spoke about the importance of being open to fintech when he launched the hub in March 2018. We also have an active regtech agenda.

Latest updates

26 October 2020: Tom Mutton, Director for Fintech, delivered a speech at the Bund Summit on digital currency, fintech and inclusive finance.

The speech sets out how innovation has helped the economy respond to the challenges presented by COVID, reflects on the importance of regulation and outlines our approach to central bank digital currency building on from an earlier discussion paper.

12 October 2020: we launched the Artificial Intelligence Public Private Forum.

In collaboration with the Financial Conduct Authority, the Forum seeks to facilitate discussion between the public and private sector on how AI will affect our policy objectives. The second forum, on data, will take place in Q1 2021.

3 September 2020: Governor Andrew Bailey delivered a speech at the Brookings Institution on recent innovations in payments and the challenges they pose.

The speech sets out the benefits and risks that stablecoins presents and explores the implications of the Financial Policy Committee’s recent expectation for payments and stablecoin regulation Opens in a new window. Digital currencies are a new type of money, with their own payment infrastructure. One alternative to private stablecoins is a central bank digital currency, which has great potential, but more work needs to be done to fully explore the impact it would have on the financial system and the role of the central bank.

Our publications on fintech

Safe deployment of new technologies

Understanding how cloud-based computing, artificial intelligence, machine learning and other technologies are being applied in financial services and beyond.

Payments for a digital age

How developments in payment methods, including digital currencies are affecting financial services and the wider economy.

Finance and the digital economy

How increased digitalisation is changing the way firms and institutions operate.

View all Fintech publications

External engagement and initiatives

We closely monitor fintech developments in the UK and globally, and actively engage with the fintech sector, industry experts and other authorities. We regularly collaborate with public and private stakeholders to harness the potential of fintech.

Artificial Intelligence Public-Private Forum

In June 2019, former Governor Mark Carney announced plans to set up a forum to look at the impact of artificial intelligence (AI) and machine learning (ML) on financial services.

In October 2019, we published Machine Learning in UK Financial Services with the Financial Conduct Authority (FCA).

We are now working with the FCA to establish the forum and have published the forum’s terms of reference. The deadline for applications to become a member of the AIPPF has now passed. We will ensure that the forum’s design reflects a wide variety of views.

In line with UK government guidance regarding Covid-19, we decided to postpone the forum’s launch and first meeting. We now plan to launch the forum in October 2020.

The AI Public-Private Forum (AIPPF) will seek to:

share information and understand the practical challenges of using AI and ML within financial services, the barriers to deployment and any potential risks or trade-offs
gather views on areas where principles, guidance, regulation or good practice examples could support safe adoption of these technologies
consider if firms’ involvement could be useful and what form it could take

List of members (pdf)

Regulation of fintech firms offering financial services in the UK

If you are a fintech firm thinking of providing financial services in the UK, you may need to be regulated.

We are responsible for supervising financial firms such as banks, building societies, credit unions, major investment firms and insurers. And we provide information and support for businesses that are thinking of setting up a new bank in the UK.

We also supervise financial market infrastructure and we act as settlement agent for payment systems.

Financial services in the UK are also regulated by the Financial Conduct Authority and UK payment systems are also regulated by the Payment Systems Regulator.

Working with fintech firms

As part of our fintech work, we have engaged in a number of proofs-of-concepts. We will continue to work with businesses on fintech proofs-of-concepts whenever this may help us fulfil our mission.