wire transfers. now fintech companies are providing domestic and cross - border payment services on significant scale through “ digital wallets ” or pre - funded “ emoney ”. tech firms take a slice of payment revenues and, in many cases, the totality of customer transaction data. 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. meanwhile so - called “ robo advisors ” are deploying algorithms to deliver affordable investment advice to retail customers. 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. all speeches are available online at www. bankofengland. co. uk / speeches 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. other fintech players are increasing competition in retail and commercial banking by providing new lending and borrowing platforms for retail and corporate customers. in a number of g20 countries, new business models draw on big data and advanced analytics to tailor products and services to customers and discipline credit underwriting. for example, peer - to - peer ( “ p2p ” ) lending has grown rapidly in recent years from a small base. in the uk, p2p lending now represents about 14 % of the new lending to smes. estimates suggest that more than half of these credits were unlikely to have been provided by existing banks. other platforms are allowing firms to borrow against invoice receivables, drawing on data gathered directly from software

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. 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 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. 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. and, to explore what could be genuinely new under the sun, we are researching the policy and technical issues posed by central bank digital currencies. on some levels this is appealing ; people would have direct access to the ultimate risk - free asset. in the extreme, however, it could fundamentally reshape banking including by sharply increasing liquidity risk for traditional banks. this last point underscores that, in order for fintech ’ s potential to be realised, authorities must manage its impact on financial stability. on the positive side, fintech could reduce systemic risks by delivering a more diverse and resilient system where incumbents and new entrants compete along the value chain. at the carney, m ‘ the spectre of monetarism ’ speech given at the roscoe lecture, liverpool john morres university, 5 december 2016 followed by its regulatory sandbox in 2015. see : https : / / www. fca. org. uk / firms / project - innovate - innovation - hub / regulatory - sandbox the pra and fca launched a new bank start - up unit in january 2016 to more effectively manage interactions with potential new entrants with innovative business models. to date, some four digital banks have been authorised. given rtgs is critical infrastructure supporting real economic activity, such access should come with proportionate responsibilities. new non - bank entrants would be required to meet liquidity and operational resilience requirements.