In order to ensure a level playing field, financial players must be regulated according to what they do and not what they are. Addressing the growing influence of borderless technology on the financial system will also require an international coordination effort. Such are the challenges that the public authorities will have to meet. *  *  *  To discuss these important issues, we are extremely fortunate to have an excellent panel today, including: •  Mrs Sarah Dalhgren, Partner at McKinsey, formerly Head of the Financial Institution Supervision at the Federal Reserve Bank of New York (FRBNY). Dear Sarah, your expertise in supervision, which you demonstrated through most of the financial crisis, will be extremely useful to assess the current situation of financial institutions in the context of financial innovation. •  We also have Mrs Sandie O’Connor, Manager Director and Chief Regulatory Affairs Officer at JPMorgan Chase & Co. Dear Sandie, you are deeply involved in your firm’s regulatory strategy and your views on how financial innovation should affect regulation from the industry’s point of view will be extremely valuable. •  I would also like to introduce Mr Alain Papiasse, Deputy Chief Operating Officer (COO) at BNP Paribas, representing the group in North America. Alain is a top market practitioner with extensive experience in both asset management and investment banking. So, dear Alain, I hope you will provide us with “insider” and complementary views on what the fintech industry can usefully bring to banks.
I prefer to talk of “gradualism” rather than the “sandbox” approach, which is another frequently mentioned solution: when precisely should fintechs be placed inside or outside of a regulatory sandbox? Segregation may be less manageable than a process of proportionate adaptation. That said, both approaches may be combined. Moreover, fintech companies, which mainly operate on the Internet, are not bound by borders. This raises questions as to the efficacy of regulations which are still largely domestic or based on residency criteria. The cross-border nature of technological innovation in the area of banking and financial services is a strong incentive for the regulatory authorities to coordinate their policies at the international level. Constructing the possible trinity between innovation, stability and regulation for digital finance requires the regulator to improve vulnerability analysis, enhance the security of transactions, adapt regulations and relax supervision, while all the time remaining vigilant. More precisely, the need to adapt supervision to the specific features of fintech companies will require setting up dedicated teams to assist them in obtaining the necessary authorisations and to organise their supervision: this will be the case in France thanks to the creation of a Joint Unit by the ACPR (the French regulator for banks and payment institutions) and the AMF (the French market regulator). However, this is only the first stage. In the long run, it will be necessary to  2  BIS central bankers’ speeches  ensure that the same rules apply to the same activities, irrespective of the players performing them.