Like 3/5  BIS central bankers' speeches  financial institutions, we need to balance the significant benefits of financial innovation with its risks. We are also mindful that the calls we make in regulating and supervising the industry can themselves sometimes, restrain innovation. Our responses to new financial technologies will continue to be primarily concerned with the risks that they pose to financial stability and consumer protection. In finding the right balance in our overall regulatory and supervisory posture, we will continue to consult widely with the industry and experts in the field. A key priority for the Bank is to ensure that our regulatory and supervisory system is appropriately calibrated to encourage innovation, but also has the agility to shift gears when required to respond to new risks. This recognises that innovation without stability ultimately destroys value, confidence and undermines our future. What does this mean in practice? There are at least three things, which are each a reflection of our ongoing efforts to build an enabling, yet safe environment for innovation: First, building interoperable infrastructures. This will start with open and fair access to a shared payment infrastructure for banks and non-banks alike. It is also important to recognise the need for other digital public infrastructures as key enablers to harness the full potential of fintech. These include having a national digital identity system, framework for open API and open banking, clear cloud policy and nationwide broadband connectivity.
Financial institutions can and must assert the much needed leadership in a world where the continued neglect of equitable development and a rapidly deteriorating environment is displacing communities, raising social and political tensions, and putting future generations at grave risk. Finance still holds the trust of society and substantial influence over economic agents. But this is a privilege earned, and demands that financial institutions behave ethically, and act in the best interest of the communities they serve. The role of technology to revolutionise finance There is no question that technology will lie at the very heart of these imperatives for the financial system. This has been true for decades, only the order of its impact is now, arguably much greater. After all, the world’s first ATM in 1967 transformed the relationship between people and money and making finance more accessible. Today, fintech signals the next phase in the transformation of finance. Fintech holds enormous potential to enhance competition, increase productivity, address unfulfilled consumer demand and fundamentally change the way institutions provide financial 2/5  BIS central bankers' speeches  services – in ways we may not even have fully discovered. Similarly for Islamic finance, adoption of technology could present significant opportunities to reduce the cost of financial intermediation and expand access. For example, distributed ledger technology could enable automated execution of contracts through the use of digital protocols, or smart contracts, which can simplify complex Shariah contractual processes.