The Bank of England is working on addressing the ‘scale-up’ challenge for fintechs, a report on artificial intelligence (AI) in finance, and new standards to support the idea of an open data platform for small business finance.
The ‘scale up’ challenge, highlighted in the Kalifa Review, is how successful start-ups can scale up into larger companies that play a more significant role in sectors of the UK financial system that still remain relatively concentrated.
Speaking at Fintech Week, Dave Ramsden, deputy governor, markets and banking of the Bank of England, said the central bank is working to improve how it tailors its approach to support growing firms. It provides support and proportionate supervision to start-up banks and relaunched the new bank’s website to provide more information.
Ramsden said the bank is also looking forward to working with the Financial Conduct Authority (FCA) as their scalebox develops and continues to work closely with them on the supervisory approach to new and growing dual-regulated firms.
In addition, he cited data strategy as a major fintech-related work stream the central bank is working on.
He said the bank is supporting the Legal Entity Identifier, a global standard designed to uniquely identify any legally distinct entity that engages in financial transactions, which creates standards that enable the efficient transfer of data between multiple parties.
Ramsden said such standards could help support the idea of an open data platform for small- and medium-sized enterprises (SME) finance.
“By bringing together a global identity standard and a safe, secure and permissioned method of sharing information, an open platform could harness novel data sources and advanced analytics to provide SMEs with more choice and better access to productive finance,” he said.
Ramsden said the central bank has been engaging with financial services firms, authorities and fintech firms on the safe adoption of AI through its AI Public-Private Forum (AIPPF).
So far the AIPFF, which is a year-long initiative co-chaired by the FCA, has explored how to adapt existing data quality standards to an AI context, fair and equal access to third party data, and approaches to data and AI governance.
Ramsden said after the last of its meetings later this year, a final report on this will be produced.
“As I hope these remarks have illustrated, fintech is a broad and dynamic sector that requires a wide-ranging and dynamic response from the authorities,” Ramsden said.
“The Bank of England recognises the benefits that fintech and technological innovation can bring, and that it may come in many forms and from many sectors.”