Bank of England Gets into Fintech Space with Accelerator for Innovations
The Old Lady is aiming to keep pace with challenges by inviting fintech firms to participate in its new initiative
The Bank of England has become the first central bank to launch a ‘fintech accelerator’ that will work with new technology firms to help it harness fintech innovations for central banking, according to an official press release on the BoE’s website.
The new initiative, which has already carried out initial work in some areas, will open the door to fintech start-ups developing solutions in data anonymization, cyber security and distributed ledger technology. In return, the accelerator will offer firms the chance to demonstrate their solutions for real issues facing policymakers, together with the valuable ‘first client’ reference that comes with it. With time, it will build a network of firms working in this space for the benefit of both parties.
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The British central bank hinted in its announcement at other areas of potential future interest for the accelerator, which may include finding new ways to structure and analyse large datasets, machine learning, particularly in relation to anomaly detection and pattern recognition, and finally protection of the Bank’s sensitive data.
How it Works
The initiative will see the BoE inviting fintech firms, selected based on clearly defined criteria, to engage in short proof of concept projects (POCs) via a transparent and competitive process. These criteria will ensure that each project has the potential to be truly innovative, relevant to the Bank’s mission and that commercial considerations are taken into account.
At the end of this process, the BoE will then consider producing an assessment of its experience and publishing the findings. Also, where appropriate, it will consider acting as a reference for the partner firms that achieved successfully completed POCs.
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Qualified applicants will also have the opportunity to become an on-going partner of the bank.
Mark Carney, the governor of the Bank of England, was planning to announce the new initiative at Mansion House on June 16. However, he did not deliver the scheduled speech due to the tragic murder of MP Jo Cox and instead paid tribute to her, saying: “She was a remarkable person who dedicated her life to helping others”.
Now released by the bank on Friday, Carney’s planned speech stated: “Fintech should neither be the wild west nor strangled at birth. The Bank is devoting considerable resources to ensure whatever develops is sustainable, not ephemeral.”
“It change the nature of money, shake the foundations of central banking and deliver nothing less than a democratic revolution for all who use financial services,” he added.
Although the so-called fintech accelerator is thought to be the first scheme of its kind launched by a central bank, it follows a similar announcement from the UK FCA which launched a “sandbox” last year to offer a ‘safe space’ in which businesses can test innovative products, services, business models and delivery mechanisms while ensuring that consumers are appropriately protected.
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