The Bank did this by: setting up a senior level Steering  4  Summarised in http://www.bankofengland.co.uk/archive/Documents/historicpubs/qb/1995/qb950107.pdf. 5  Today, the standard settlement times in CREST are T+2 for equities and T+1 for gilts. 4  BIS central bankers’ speeches  Committee to oversee the development of the design; forming many working-level working groups and consulting on all major design decisions; and ensuring that the industry bore the cost of the overall project. The Steering Committee was for making decisions and knocking heads together. According to a “senior banker” quoted by the Independent newspaper, Pen Kent (as Chair) and Iain Saville (as Chief Executive) were a “Mr Nice and Mr Nasty’ duo … bludgeoning the vested interests which sank TAURUS into submission” 6. The consultations were voluminous, had short turn-rounds (some as little as two weeks), and respondents received personalised replies (much to their initial surprise): a strategy christened “choking the cat with cream”. And the financial commitment sought by the Bank was broad-based: when CRESTCo was first established, 69 institutions were asked to subscribe £ in share capital, giving them skin in the game from the start. Second, the project team committed to an approach to building CREST that was simple, focused and open: in the design of the system itself, and in the composition and work practices of the project team. From the start, the November 1993 “Green Book” set out a deliberately minimal blueprint, excluding non-critical functions required only by a few, or which could be performed by users in their own systems.
It’s entirely possible that some new FinTech players will eventually make their mark as enduring brands in finance. But we are also likely to see the growing collaboration I have talked about, between established players and start-ups. It is not a zero sum game. And FinTech ventures are also acting as a catalyst for existing players to reengineer legacy systems. But most importantly, FinTech is promoting a shift from the traditional focus on products to a focus on customers. It’s about understanding their needs, and finding a way of delivering cheaper, or more convenient and more tailored services to the customer. The second tension is also important, and which we must be willing to manage. It’s the tension between allowing for experimentation in finance and preserving trust and credibility in our financial system. They are both important and we must be willing to manage the tension. There was I think, in the first wave of FinTech, a certain breathlessness in the way which new businesses were coming up, and in the way which they were perceived and talked about. Such as, in the (Peer-to-Peer) P2P lending platforms, where the name of the game was often to lend as quickly as you can, leveraging on investments in these FinTech companies. The scene is now maturing. Some of these new lending platforms in the US and elsewhere are now more concerned with the quality of loans they make. Like banks, whose business is credit underwriting, they have to be good at both data analytics and judgment.