The Bank of England may open its doors to tech companies and payment firms, and the move could potentially boost the U.K.’s $9 billion FinTech sector in the face of Brexit, Reuters reported.
BoE Governor Mark Carney said the bank is going to consult in 2020 about giving an “appropriate” amount of access to its 500 billion pound balance sheet to payments companies, which will let them be on a more even playing field with big banks that currently control the sector.
If approved, it would be the first time a bank allowed non-banks to have access to its balance sheet, which could attract large tech companies into entering the field.
“The Governor’s promise to go further by opening (the BoE) balance sheet and access to the payments system could further cement London’s role as a key international FinTech hub,” said Margaret Doyle, a partner and the chief of financial services insights at Deloitte.
John Cronin, a Goodbody banking analyst, said the bank could also be using the move as insurance if payment companies start out earning traditional banks.
“Arguably over the much longer term it could be seen as a defensive move if banks’ business models were to come under threat from Facebook’s Libra and others,” Cronin said. “You can see how winners and losers emerge.”
Payments make up a large portion of FinTech but they don’t yet match the role of banks, in terms of being the lynchpin of the financial system.
British Finance Minister Philip Hammond recently announced that there would be a complete review of the payments landscape, to ensure that regulation keeps up with the “dizzying array of new payments models.”
Right now, only systemically important firms like clearing houses, broker-dealers and banks can access the central bank’s coffers. Carney said that Facebook’s plans with Libra, a proposed cryptocurrency, could turn it into a a systemically important financial firm.