Payments: Diversity Matters
Speech given by
Victoria Cleland, Executive Director, Banking, Payments and Innovation
European Women Payments Network Annual Conference, Amsterdam
5 June 2019
I would like to thank Samantha Leighton, Richard Lewis and Sara Ward for their help in preparing this
speech.
I am delighted to be speaking today at the European Women Payments Network (EWPN) Annual
Conference. Amsterdam, as home to what is reputedly the world's oldest stock exchange, founded in 16021,
is an apt location to discuss payments. While people's fundamental requirements when exchanging value
probably have not changed very much since then, the choice of how people make payments, and the
technology which facilitates this, certainly has.
Such changes can only come about through listening to what is needed and harnessing innovation. How
much more quickly would these changes have come about if EWPN had been around a few centuries ago?
EWPN's focus is
'making diversity matter in fintech', by building a community for women and by championing
a more diverse and inclusive payments industry for all. In keeping with this, I want to set out how, through
the lens of our work in payments, we are embracing the changes that fintech can bring and why diversity
matters to the Bank of England.
The Bank's mission is to promote the good of the people of the United Kingdom by maintaining monetary
and financial stability. We also have a complementary interest in enabling innovation and encouraging
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competition including in the fast-moving payments landscape.
To deliver against these objectives, we must embrace diversity in the broadest possible sense. As the
Bank of England Governor Mark Carney recently stated, 'a public institution should reflect the public it
serves.'2 If we want to respond to the needs of the public, we need to understand what matters to them
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and what better way of doing that than having a diverse range of staff reflecting the population? Diverse
teams can reduce group-think and excessively optimistic views, and ultimately reduce the likelihood of poor
decisions. And research has shown that companies with more diverse leadership teams tend to outperform
3 4
their peers in terms of profitability and that diversity in companies is positively correlated with innovation.
Payments is an area which is responding well to an increasingly vocal and diverse range of preferences and
demands across the world. Different people want - and may need - different ways to pay. They want
genuine choice in how, when and where they make payments: they want a new finance.5 Back in the 17th
century, the Amsterdam stock exchange would have been relying on exchanging coins and printed stocks
and bonds. The world of payments has grown significantly - banknotes, cheques, credit/debit cards, and
now a plethora of mobile payments, e-wallets and even the ability to pay using a watch. While the wave of
new fintech providers has greatly increased this choice, for many cash remains the preferred or sole means
to pay (17% of the UK population are unsure how they would cope, or would not cope at all in a cashless
society).6 Facilitating access to cash, maintaining confidence in the currency and ensuring that people have
1
http://www.worldsfirststockexchange.com/the-worlds-first-stock-exchange.html
2
https://www.bankofengland.co.uk/-/media/boe/files/speech/2019/investing-in-ethnicity-and-race-speech-by-mark-carney.pdf
3
https://www.mckinsey.com/business-functions/organization/our-insights/why-diversity-matters
4
http://media-publications.bcg.com/22feb2017-mix-that-matters.pdf
5
https://www.bankofengland.co.uk/-/media/boe/files/speech/2019/a-platform-for-innovation-remarks-by-markcarney.pdf?la=en&hash=49FE92075B4C7DBB0C7E0975CDF38488BB0A02FB
6
https://www.accesstocash.org.uk/media/1087/final-report-final-web.pdf
a diverse range of safe and efficient payment methods to choose from, are strategically important for the
Bank.
A diverse set of firms providing a diverse set of payment options is also important for financial stability and
the operational resilience of the industry. This gives the public confidence when making and receiving
payments. The Bank plays a role in this resilience through the safe functioning of our own payment
operations such as banknote issuance and the Real-Time Gross Settlement (RTGS) service. We also
deliver this through monitoring and mitigating systemic risk across the payment industry, defending the Bank
and financial sector against increasingly sophisticated cybercrime, conducting risk assessments and
supervisory activity on those firms that use the Bank's payment infrastructure, as well as supervising the
systemically important payment systems themselves. And we consider the benefits and risks to financial
stability from the rapidly changing fintech industry.
through the policy and rules we set and the
The Bank enables diversity in payment types and providers
infrastructure we operate. An important catalyst is the renewal of RTGS, where we are making both policy
and infrastructure changes to support not just a resilient payment system, but one that new players can enter
and where innovation and competition can thrive. For those not familiar with RTGS, it is a critical piece of
national infrastructure and the backbone of UK payments. Well in excess of £600bn every working day is
settled through RTGS, including from CHAPS, the Bank-operated high-value payment system, and from the
final settlement of the UK's retail payment
systems.
The Bank has established the RTGS Renewal Programme to develop a new service which will not only
enhance resilience but will also be fit for the future and promote innovation. Having defined the Programme
scope, with input from the payments industry, we are now running a competitive public procurement process
to appoint a Technology Delivery Partner. They will work with the Bank on the design and build of the core
settlement engine. In supplementing the skills and resources we have in-house, the procurement provides
the opportunity to benefit from diverse views and to draw on world-class expertise and cutting-edge
experience on how we design and build RTGS for the future.
In renewing RTGS, we are seeking to achieve five key outcomes, all of which will support a safe and diverse
payment landscape.
Despite being over 20 years old, the current RTGS service remains highly resilient. But we want to do more.
The new service will be in an increasingly complex and
materially stronger and more resilient
sophisticated environment. It will be flexible to protect against the threats we understand today and the ones
we will need to adapt to in the future.
RTGS Renewal will promote greater access to payment systems. We have already made policy changes to
allow non-bank payment service providers direct access to payment systems and RTGS Renewal will reduce
some of the barriers that we know exist today. It will speed up on-boarding times to the system and reduce
the operational overheads of membership. These changes will further accelerate the number and range of
firms that can gain direct access to payment systems. Since 2018 five non-bank payment service providers
have opened accounts in RTGS and around twenty further firms are exploring the possibility of joining.
These firms can benefit from faster transaction times and reduced individual transaction costs.
Consequently, the Bank hopes to encourage a greater diversity of players in the payments market, thereby
encouraging innovation and competition through development of new business models and ultimately
creating a more diverse payments landscape. This will increase efficiency and reduce concentration risk
thus supporting financial stability.
RTGS Renewal will also promote resilience and efficiency through greater interoperability across payment
systems. An important step to achieving this is the introduction of a new payment messaging standard for
UK payments: ISO20022, the emerging global standard for payments messaging. This will bring significant
and long term benefits for a wide range of firms. In particular, the Bank and Pay.UK will introduce a
Common Credit Message across CHAPS, Bacs and FPS which will bring message harmonisation for the
UK's main interbank
payment systems and compatibility with the emerging international consensus.
We will provide in the new RTGS service and build a flexible infrastructure
improved user functionality
capable of adapting easily to new and changing requirements, enabling us to respond to continued
innovation from new fintech firms as well as established players. Improved functionality will include read and
write APIs and richer payment and liquidity data.
In 2017 we brought the operation of CHAPS into the Bank to strengthen end-to-end risk management and
to enhance the safety and security of the £330bn of payments that flow through CHAPS on an average day.
We are increasingly able to draw on the diverse set of tools and expertise available within the Bank, e.g.
cyber security skills, to support CHAPS. We are starting to reshape the requirements that apply to CHAPS
direct participants, reflecting the expanding range of participants: up from 14 in 1987 to 34 today. CHAPS
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access criteria and requirements already accommodate a wider range of participants than five years ago
including three Financial Market Infrastructures and one non-bank payment service provider.
In designing the new RTGS infrastructure to achieve these five key outcomes, and in running the current
CHAPS and RTGS services, we believe it is important to engage a wide range of firms across the
payments industry, as well as their customers. This goes much wider than the current membership: we
need to think about prospective participants too and to understand the evolving needs of end-users. To
bring a range of perspectives and diversity of thought to our approach, the RTGS/CHAPS Board7 has four
independent members with commercial and international experience and is attended by a representative
from the National Cyber Security Centre.
7
https://www.bankofengland.co.uk/payment-and-settlement
We have a number of channels to facilitate engagement, including the RTGS Renewal External Advisory
Body, the Standards Advisory Panel and the CHAPS Strategic Advisory Forum.8 Membership spans current
CHAPS direct and indirect participants and not just the traditional large banks, but also new players, trade
bodies, regulators, various UK government departments, software vendors and end users such as
corporates. We work closely with the Prudential Regulation Authority, Financial Conduct Authority and
Payment Systems Regulator on a range of topics. And the Bank also engages extensively with Pay.UK, who
are delivering change across the retail payment schemes through their New Payments Architecture9
programme.
Understanding the needs and challenges of a diverse set of firms and their customers informs our decision
making. It means we are better able to reflect the requirements of the firms that use the services we provide
and ultimately the people of the UK. And we can balance the potentially competing needs of different
stakeholders on an informed basis rather than relying only on the views of longstanding contacts.
A key piece of engagement took place in summer 2018 when we ran a joint consultation10 with Pay.UK and
the Payments Systems Regulator on the implementation of ISO 20022. Over 70 organisations replied and
their responses11 helped refine our approach, for example on Legal Entity Identifiers (LEIs). Responses
showed widespread support for making LEIs mandatory for transactions between financial institutions in
CHAPS. Many respondents also saw the benefits of mandating LEIs for a wider range of payments but
flagged the need for wider adoption of LEIs before these benefits could be fully reaped. The Bank has
committed to working with key stakeholders including HM Government and the Global LEI Foundation
(GLEIF), as well as providing further education about the wider economic value of the LEI. This will lay the
foundations to make LEIs mandatory for a much wider set of CHAPS payments in the future.
We are also seeking industry views on whether the renewed RTGS service could facilitate synchronised
settlement and importantly what the demand might be. Synchronisation, or atomic settlement, is the concept
that two or more transactions (payments or movements of assets) are linked in such a way as to ensure that
each transaction completes if, and only if, they complete together. This is an innovative proposition, and we
are working in close collaboration with the payments industry and potential users on the policy, technical and
operational design. Later this year we will provide an update on our August 2018 call for interest on this
topic.
This is an exciting time for payments internationally as well as domestically. We therefore have a strong
engagement programme with other central banks and overseas authorities. We work with our peers to set,
and role model, global best practice and to find ways to drive harmonisation. And we can learn from their
8
https://www.bankofengland.co.uk/payment-and-settlement
9
https://www.wearepay.uk/new-payments-architecture-programme/
10
https://www.bankofengland.co.uk/-/media/boe/files/payments/rtgs-renewal-programme/iso-20022/iso-20022-consultation-paper.pdf
11
https://www.bankofengland.co.uk/-/media/boe/files/payments/rtgs-renewal-programme/iso-20022/iso-20022-consultation-response.pdf
experiences. This collaboration will be all the more important as we seek to address issues around
cross-border payments.
To deliver the intended outcomes for the RTGS Renewal Programme we will continue with our extensive
industry engagement and outreach. And as the transition approaches we also need the payments industry
to act: to start preparing for the changes needed to their own organisations and to harness the benefits for
their own firms and customers.
Listening, and responding, to a diverse range of views is important in enabling the Bank to advance its
But to be able to react effectively we also need diverse technology and
objectives to benefit the public.
diverse and talented staff.
Developments in technology, both to enhance resilience of existing payments and to innovate in new forms
of payments, are important to support the Bank in advancing its objectives. This is equally true for physical
and electronic payments.
In my previous role as Chief Cashier, I led our work to issue banknotes printed on polymer. We harnessed
innovative technology both in the security features selected, and in introducing a tactile feature on the new
£10 polymer banknote to help blind and vision impaired people identify our notes. This meant we exploited
technology to produce banknotes which are not only secure, but inclusive.
And now we are assessing how we can embrace diverse technologies through RTGS Renewal. Although
the Bank has concluded that Distributed Ledger Technology (DLT) is not yet sufficiently mature to provide
the core for the next generation of RTGS, we still place a high priority on ensuring the new service is capable
of interfacing with DLT. In summer 2018 we ran a Proof of Concept12 with four firms to develop payment
arrangements using innovative technologies. Importantly, the results demonstrated that participants using
such technologies could connect to and settle in RTGS. This has informed our thinking on how RTGS could
support settlement in a more diverse range of systems, and provided broader insight into the range of
functionality the Bank might need to offer to support this sector.
We are also seeking to develop a renewed service that will be message network agnostic: capable of
sending and receiving payment messages from multiple sources and interfacing with multiple messaging
networks without compromising on levels of security or proof. And we will continue to support the resilience
of the renewed RTGS by diversifying operations across two sites with a third stand-by settlement platform
which is geographically remote.
As I stressed at the start, the Bank needs to reflect the diversity of the people it serves and so increasing the
diversity of the Bank's workforce is at the top of our agenda. We have set ourselves stretching but
12
https://www.bankofengland.co.uk/-/media/boe/files/payments/rtgs-renewal-proof-of-concept.pdf
achievable targets in respect of increasing the representation of women and BAME colleagues at all levels of
the business.13 And we have implemented a wide range of initiatives designed to improve diversity in our
recruitment, development and retention of talent across a range of protected characteristics.
Bank's senior leadership team, I have personal
As a member of the accountability for delivering a step
change in the Bank's diversity. This is crucial in my own Directorate but also for the Bank as a whole. I am
Bank's
the Executive Sponsor of the disAbility Network, a staff-led network whose objectives are to:

Raise awareness of the full spectrum of disabilities, be they visible or not; and

Provide support by identifying and removing barriers for individuals with disabilities and enabling
them to reach their full potential.
The Network celebrated its 10th Anniversary last year, and during that time has seen physical changes to the
building, including an external wheelchair lift (no mean feat in a listed building), hearing loops in key rooms,
and accessible toilets. But it is also important to create an inclusive and supportive culture that works for
everyone. The disAbility Network is just one of ten staff networks, and it is only through fostering these
initiatives, ideas and enthusiasm that we can attract and retain a truly diverse range of staff.
So to conclude, diversity in payments does matter. It matters to the Bank; to the firms providing payment
services; and to the businesses and individuals that use payments every day. The Bank is playing a leading
role in facilitating and enabling that diversity through our policy-making, and through our current and
renewed RTGS infrastructure, in order to promote a diverse, resilient and thriving financial system.
13
https://www.bankofengland.co.uk/-/media/boe/files/speech/2019/gender-diversity-speech-by-joanna-place.pdf