The current Governor of the Bank of England, Mark Carney, has said that Fintech disruption could mean the end of universal banking as we know it.
Speaking at the Deutsche Bundesbank G20 conference in Weisbaden, Carney recognised the potential challenges of heading down the Fintech path; including the effects of greater complexity and operational risk.
Carney spoke in general terms about the potential for Fintech to improve customer choice and efficiencies, while also making the system more effective and resilient.
Carney said: “Looking ahead, it is possible that virtual currencies and Fintech-based providers, particularly where they gain direct membership to central bank payment
systems, could begin to displace traditional bank-based payment services and systems. Such diversification could be positive for stability; after all the existing tiered and highly concentrated system has created single point of failure risks. At the same time, regulators would need to monitor such changes for any new concentrations.”
The Bank of England has already published papers regarding Fintech disruption, and it has also taken an active role by initiating an in-house accelerator for the purpose of learning and observing.
This particular focus on Fintech from the Governor of the Bank of England correlates with the current boom in innovation and investment in the industry. Banks are mobilising rapidly in a race to utilise technologies such as Blockchain and Bitcoin.
An EU watchdog has also recognised the importance of the boom, and has warned that banks racing toward technological evolution should consider the risks of bringing new Fintech innovations aboard too readily.
Recent news has included a group of seven banks comprised of names such as HSBC, collaborating to initiate a plan to start using Blockchain by the end of 2017. The same EU watchdog has carried out an analysis of Blockchain, concluding that the technology’s security can be compromised by conventional methods of infiltration.