With hundreds of millions now entering the digital financial system every year, could higher economic growth and a quantum leap in social equity be on the horizon? Or will the range of new financial technologies primarily make existing institutions and markets more efficient and effective? No small prize but hardly a transformation. 1  See Ernst and Young, (2016), “FinTech on the Cutting Edge”: http://www.ey.com/uk/en/industries/financial-services/banking--capitalmarkets/ey-uk-fintech-on-the-cutting-edge 2  All speeches are available online at www.bankofengland.co.uk/speeches  2  Of course, technological innovation has long been twinned with finance. Today’s system is the product of past advances, beginning with the simple ledger in the fifteenth century. Building on this foundation, a range of innovations – from the telegraph in the 1860s to the digitalisation of the ledger a century later – have created the plumbing of modern payments, clearing and settlement infrastructure necessary for global financial institutions and cross-border, wholesale markets. More recently, customer access has been opened up with the introduction of the first automated teller machines of the 1960s, the arrival of online banking and brokerage in the 1980s, and the rapid rise of mobile banking since the millennium. Despite these advances, finance continues to be arranged around a series of hubs like brokers, clearing houses and exchanges; whereas in other domains, people are increasingly forming connections directly, instantaneously and openly, revolutionising how they communicate, work, and live. The extent to which finance could be redrawn depends on superficially arcane, but fundamentally vital, enabling technologies.

The Potential Impact of FinTech on Financial Stability As I mentioned earlier, the FSB is assessing how FinTech developments are affecting the resilience of the system; by identifying the risks associated with new and existing financial institutions and activities, and the supporting financial market infrastructure. In so doing, the FSB is making use of its existing risk assessment frameworks for evaluating the systemic risks around banks, insurers and financial market infrastructure, as well as activities beyond the regulated sector. 14  Our starting point is that there is nothing new under the sun. We need to be disciplined about consistent approaches to similar activities undertaken by different institutions that give rise to the same financial stability risks. Just because something is new doesn’t necessarily mean it should be treated differently. Similarly, just because it is outside the regulatory perimeter doesn’t necessarily mean it needs to be brought inside. 13  In today’s interconnected world, many citizens have authorised the use and onward sharing of their data without realising it. In considering digital identities, there may be opportunity for citizens and their elected representatives to agree what arrangements should be put in place to safeguard data, including who it could be shared with. 14 These frameworks provide methodologies for assessing the systemic importance of: financial institutions, markets and instruments and of non-banks, non-insurers (NBNI); risks from shadow banking; and principles for Financial Market Infrastructure.