The more this can be realised the more the new financial system will support the new creative jobs people will need – and enjoy – in the coming Machine Age. 20  While only private sector ingenuity will make these gains possible, authorities have essential, supporting roles in reinforcing them and managing the associated risks to financial stability. To help realise FinTech’s promise, we should refresh our supervisory approaches in a few ways. First, regulatory sandboxes can allow businesses to test innovative products, services, business models and delivery mechanisms in a live environment and with proportionate regulatory requirements. This supports innovation and learning by developers and regulators. The FCA was an early mover launching Project Innovate in 2014. 21  The G20 might consider the extent to which such approaches should be adopted  more widely. Second, existing authorisation processes can also be adapted to ensure they do not unnecessarily block new business models and approaches. This is why in the UK, the PRA and FCA now work closely with all 22  firms seeking new authorisation as banks. Third, the Bank of England is expanding access to central bank money to non-bank payments service providers (“PSPs”). Allowing access to the Bank’s Real Time Gross Settlement System allows PSPs to compete directly with banks, and so supports innovation, competition and financial stability. 23  Fourth, a number of authorities, including the Bank of England with its FinTech accelerator, are developing Proofs of Concepts with new enabling technologies from machine learning to distributed ledgers.

In the process, they are systematically capturing the type of knowledge I used to gain from my daily interactions with customers in the bank branch. Some providers are leveraging this data to sell their customers non-bank products and services. This – and the desire to avoid regulation – reduces their incentive to integrate upstream to conventional banking. Traditional universal banking begins with the customer relationship – or what I used to have as a teller. This historic preserve of established financial institutions is now being opened up. Aggregators, making use of banks’ Application Programme Interfaces (APIs), are providing customers with ready access to price comparison and switching services. New pro-competition policies are reinforcing this competition. 3  Meanwhile so-called “robo advisors” are deploying algorithms to deliver affordable investment advice to retail customers. 3  The second Payment Services Directive (PSD2) will allow, conditional on FCA authorisation and customer authority, non-banks to access customers’ bank account data. In the UK, the Competition and Markets Authority has required that the UK’s nine largest banks adopt an open banking standard for APIs by early 2018. 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  As customers become more willing to delegate decision-making to machines, their funds and loans are being better matched with the best rates from around the system. These flows could become seamless if public policy initiatives and new technologies combine to create digital credentials that are universal, durable and reliable.