Fintech accelerator focuses on data analytics, information security and distributed ledgers, says Bank of England

In a recent speech (5-page / 150KB PDF), Charlotte Hogg reiterated the Bank's desire to develop its "practical experience of fintech" through its fintech accelerator. The Bank has opened the process of applications for participation in the next tranche of 'proof of concept' (POC) projects it will undertake in its accelerator scheme.

The Bank launched the fintech accelerator in June this year a bid to find technology companies to work with on POC projects with the aim of enabling it to "harness fintech innovations for central banking", it said at the time.

Recent POC projects "have covered three main areas – data analytics, information security, and some work exploring distributed ledgers", Hogg said.

On the Bank's exploration of data analytics tools in the accelerator, Hogg said: "A recent addition to the fintech accelerator is a POC with BMLL Technologies that uses a machine learning platform, applied to historic limit order book data, to spot anomalies and facilitate the use of new tools in our analytical capabilities. A second new POC, with Enforcd, uses an analytic platform designed specifically to share public information on regulatory enforcement action. Data visualisation and communication similarly has the power to transform. A good policy not understood is worthless."

Hogg said fintech tools that use data to help "identify, protect, detect and respond to cyber threats" had also been explored by the Bank in its accelerator.

"We ran a POC with Bitsight using publically available bulk data to assess our own resilience" Hogg said. "We have also partnered with two firms – Anomali and ThreatConnect – that provide innovative technologies to collect, correlate, categorise and integrate cyber security intelligence data."

"Most network defence models and technology solutions in use today continue to focus overwhelmingly on aggregation of tactical indicators which, when collected and processed in isolation, provide limited value to security teams seeking to prioritise detection and remediation efforts. The work will help to assess how tactical threat information can be enriched to provide relevant operational and strategic context in order to prioritise monitoring and mitigation efforts against given threats," she said.

Hogg said new tools and technology require the Bank to change its culture and adapt its own approaches, and that this had been evident in its POC testing of distributed ledgers. It "trialled non-traditional ways of technology development including through co-located cross-discipline working, taking a continuous approach to build and integration of the technology, and automating testing built in from the outset", she said.

In her speech, Hogg said that while new technologies create new opportunities, fintech may also have "unknown ramifications".

"For fintech, I think there remain real questions around the potential risks and as yet unknown ramifications," Hogg said. "As we have seen before, not least during the financial crisis, even the tools considered the most advanced analytically at the time may be flawed – and how would we know, if the AI techniques make the approach all but impossible to unpick."

"How should one govern or regulate financial services provisioned using AI? In cyber, for example, how would we judge the balance between protecting core infrastructure from insider risk whilst ensuring acceptable levels of privacy? Again, experience will help us to understand those questions and ultimately contribute to a debate that we need to have. Not just as regulators or the central bank, but as societies, as part of our mission to promote the public good," she said.