-  Third, major advances in the services available to consumers of non-financial products have made them much more demanding of a similar consumer experience from banks and their peers. Younger consumers in particular now rely totally on their phones, and expect the same ease of use, choice and service integration they get from the so-called ‘GAFA’ (Google, Apple, Facebook and Amazon). Firms in Asia and elsewhere, such as Alipay and Tencent, unencumbered by legacy systems, have perhaps moved furthest and fastest in that direction. -  And, fourth, public authorities are putting more weight on competition, reflecting a frustration in some quarters with the pace of consumer-benefiting change, and a recognition that innovation and competition may actually boost, rather than harm, prudential stability, where it helps reduce single points of failure and replace operationally vulnerable legacy systems. In the UK, the Bank of England has a New Bank Start-up Unit and has recently broadened access to its Real-Time Gross 3  Settlement service ; the government created a new Payments Systems Regulator, focused on competition, and is implementing Open Banking, itself the result of recommendations from the CMA; and the FCA has pioneered the use of a so-called ‘regulatory sandbox’ as part of its Project Innovate. These are strong and persistent forces. The resulting technological change and innovation, though uncertain in timing, will have profound implications for the nature and range of financial services available to households and firms.

Traditional distinctions between regulated and unregulated activities, retail and wholesale, on-shore and off-shore, will blur as conventional models of intermediation are progressively ‘unbundled’. And new networks will emerge to change the way economic agents interact. Some of these developments will be positive. Some may not be. Either way, central banks cannot afford to stand on the sidelines if they are to continue to deliver their mission of monetary and financial stability. 3  See http://www.bankofengland.co.uk/pra/nbsu/Pages/default.aspx and http://www.bankofengland.co.uk/publications/Pages/news/2017/048.aspx respectively. 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  Many of the most profound policy questions central banks will have to answer relate to financial stability. Would a financial system based around narrower, more specialist payments, lending or asset management entities be more or less safe than one based around universal banks? If banks themselves increasingly morph into utility providers, acting as platforms for others to sell their wares, what does that mean for the distribution of risks in the system? How does one judge the appropriate positioning of the regulatory perimeter to ensure that risks are appropriately overseen whilst allowing valuable innovation to flourish? Do financial intermediaries and market participants understand the operational and financial risks posed by new models of service provision, communications and technologies, and can they control them effectively? What does the introduction of ever-faster trading and banking systems, and the increasing use of algorithm-based trading and financial advice mean for market dynamics? But FinTech also poses practical opportunities and challenges for central banks’ own operations.