Tech set to revolutionise payments, says BoE official

Business@inews.co.uk

The UK is on the brink of a payments revolution with “significant benefits” for consumers and businesses, the Bank of England’s Deputy Governor with responsibility for financial stability has said.

Technological innovation could result in a transformation in the way people pay and get paid for things, Sarah Breeden claimed.

Radical developments include technology that enables an online customer’s funds to be reserved at time of purchase and automatically released to the seller only once physical delivery of goods is confirmed – helping to curb fraud.

Others included the ability of train commuters to be automatically refunded if the train arrives late without the need for the current administrative red tape. Technology authorising payment upon delivery could help small businesses ease the problems of late payments.

The advances may also cut the cost of retail payments, especially crossborder payments, or make so-called micropayments, which are for very small amounts, more economic.

The changes could boost “economic activity and growth,” she said in a speech at the Innovate Finance Global Summit in London.

“Money and payments have been no stranger to technological innovation over many centuries. But the pace, breadth and depth of technological change we see now suggests even more radical change may be ahead of us,” she added.

Innovations also offer opportunities to settle financial operations between major banks and other financial institutions such as the Bank of England faster and more efficiently.

“The direction of travel towards more efficient post-trade processes in financial markets is clear,” she said.

She cautioned there were also risks, warning that these could come from new finance firms who may be able to quickly provide services to consumers worldwide if banks and other traditional financial groups ignored the innovations.

The Bank, along with other central

Sarah Breeden said that ‘radical change’ lay ahead for the sector

banks, will continue to provide the safest form of money and the infrastructure to use it and ensure its role as an “anchor of confidence in different types of money in the economy is not eclipsed”.

“I am firmly of the view that the technology revolution will hit – indeed, is hitting – finance in the way it has hit other sectors of the economy.”