The Old Lady of Threadneedle Street moves with the fintech times
The future of financial services regulation is a hot topic these days and its risen up the agenda thanks to a number of reasons.
Most obviously, Brexit has necessitated a major debate about the direction of regulation, with competing voices calling for either robust mutual recognition (favoured by many in the City) or a bold programme of divergence in order to capitalise on the benefits of withdrawal.
One unlikely advocate of this latter position is the EUs former commissioner for financial services, Lord Hill, who told the House of Lords recently that if were going to leave we may as well do so with gusto.
Another reason why regulation occupies a permanent spotlight is the changing nature of financial services and, specifically, the transformative potential of technology.
Read more: Transferwise becomes first non-bank to join Faster Payments
Around 60,000 City workers are in fintech – an industry that barely existed a decade ago. London is hoovering up global investment in this sector, reaping the rewards of a framework that has been developed by City regulators in recent years. The Bank of England and the Financial Conduct Authority have won praise from the tech sector for the way in which theyve worked to make the UK a fintech powerhouse.
Yesterday, a significant milestone was reached when the Old Lady of Threadneedle Street revealed Transferwise (the global money transfer provider founded in 2011) has become the first non-bank payment service provider to be granted a settlement account with the Bank of Englands Real Time Gross Settlement (RTGS) system.
In laymans terms, this means that Transferwise (through which 2m people transfer more than £1.5bn a month) will now operate on a playing field previously reserved for large, traditional banks.
Read more: The fintech revolution is democratising finance
The announcement constitutes a significant moment in the Citys story and could herald, in the words of governor Mark Carney, a new wave of competition and innovation.
The Bank opened up its RTGS system to applications from non-banks last summer, and its a sign of the health of Londons fintech scene that Transferwise has taken advantage of this. It wont be the last disrupter to muscle in on a domain dominated by established players.
Its good to see that the Bank of England, founded in 1694, is embracing the future.
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CityAM
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