Dave Ramsden of BoE Explains Its Approach to Fintech

Mr. Ramsden highlighted that being open to new ideas and new ways of doing things is crucial for innovation. New approaches can improve the quality and inclusiveness of the financial services. However, this openness should not compromise the existing standards. Instead, it is necessary to weigh potential benefits to efficiency and resilience, against potential risks to financial stability. New general purpose technologies like artificial intelligence and machine learning hold the promise of increasing economic productivity and providing better products across the economy, including in financial services. To ensure that the risks and opportunities are balanced appropriately, BoE is researching machine-learning deployment. Throughout the work on artificial intelligence/machine learning the aim is to enable safe innovation. This is how BoE balances the competing demands of its primary objectives, which include ensuring financial stability and ensuring safety and soundness of firms, and its secondary objectives such as promoting competition.

He highlighted that in the UK a model of open banking has been pioneered, using Application Programming Interfaces (APIs) that allow consumers to have better control over their banking data. If the architecture and legal and technical safeguards can be built, users can have sight of, and control permissions for, every use of their data. BoE is exploring the possibility of applying this approach to help small businesses harness the power of their data, drawing on some positive aspects of China’s experience with real-time data. Next, he talked about the importance of BoE being open to changing the way it works. He highlighted that, to regulate the digital economy effectively, it is necessary to be equipped with appropriate digital tools. BoE wants to leverage modern technology so that the way it collects and analyzes data becomes cheaper, faster, and more effective. This would provide a foundation that is both more resilient and has lower barriers to entry; helping private sector innovation to flourish.

To achieve these goals, BoE is reviewing its data strategy to embrace new technology. Work has started on deployment of proof-of-concepts to see what potential benefits artificial intelligence or machine learning could have for identifying regulatory issues. BoE is also looking to make the regulatory rulebook machine-readable, providing a platform on which firms can develop innovative methods to ensure their compliance. Finally, Mr. Ramsden noted that it is important to leverage existing forums to promote global co-operation and co-ordination on technology issues. Global financial institutions for policy coordination (such as FSB, BIS, and IMF) provide important forums in which one can highlight concerns and work to find agreement where it exists. He mentioned that BoE wants to work with its international partners to ensure fintech is supported by international cooperation, rather than creating new dislocation.

Related Link: Speech

Keywords: Europe, UK, Banking, Fintech, Artificial Intelligence, Machine Learning, Open Banking, Reporting, Machine-Readable Regulations, BoE