As the BIS Innovation Hub widens its reach, success will rely on its ability to cultivate a supportive ecosystem which includes financial institutions and innovators alike.
The BIS (Bank for International Settlements) has announced a plan to extend its Innovation Hub program – in collaboration with central banks – in several major markets across Europe and in North America over next two years.
The BIS Innovation Hub was established last year to identify and develop in-depth insights into critical fintech and regtech trends of relevance to central banks, to explore ways to enhance the functioning and stability of the global financial system, and to serve as a focal point for a network of central bank experts on innovation.
In the next two years, a Toronto centre will be opened in collaboration with the Bank of Canada; a London centre in collaboration with the Bank of England; a Frankfurt and Paris centre in collaboration with the European Central Bank/Eurosystem; and a Stockholm centre in collaboration with the central banks of Denmark, Iceland, Norway and Sweden.The BIS will also form a strategic partnership with the New York Federal Reserve Bank.
This expansion will widen the Innovation Hub’s reach and help to spur central bank work across multiple fintech and regtech pillars.
“With this expansion, the Innovation Hub will be well placed to advance work on a broad range of issues of importance to the central banking community, including digital currency and digital payments, cyber security, distributed ledger technology and artificial intelligence,” said Benoît Cœuré, Head of the BIS Innovation Hub.
“This expansion is a testament to the central banking community’s commitment to innovation and cooperation.”
In this, the BIS is following in the footsteps of the GFIN (Global Financial Innovation Network). Formally launched in January last year, the GFIN today comprises some 50 banking sector regulators, international standard setting bodies, and other interested industry parties.
The primary founding ambitions for the group are to collectively encourage fintech and regtech innovation, to support knowledge-sharing among members, and to foster cross-border trials of new technology offerings.
Last year, the GFIN invited applications from tech innovators interested in running a cross-border trial of their tools and products. After receiving dozens of applications from across the globe, only eight were selected to progress to developing testing plans.
While the GFIN initiative continues to be ground breaking, it is important to note that none of the projects in the initial cohort advanced to actual testing. Understanding and adapting the learnings from that experience will be very important for the BIS initiative.
GFIN regulators achieved something important and difficult in linking up with one another around this initiative. Yet perhaps less than sufficient attention was dedicated to cultivating a supportive ecosystem.
This may be instructive for the BIS Hub programme. The success of these multi-party initiatives requires that a structured collaborative network be established, involving at minimum the financial institutions eager to partner with innovators, and the innovators eager to work within such a structured context.
By promoting and facilitating knowledge sharing among such firms – as well as among regulators and central bankers – these programmes create a force-multiplier that may amplify their impact and speed desired outcomes across the relevant ecosystem.
The co-author of this article, Stephen Scott, is CEO of US-based regtech firm Starling, one of the eight firms to pass the initial GFIN screening.