Next month, regulators from the UK and New York will kick off a staff-sharing initiative. The New York Department of Financial Services and the Bank of England are launching this program to exchange knowledge and experiences focused on emerging financial technologies and services.
This initiative, called the Transatlantic Regulatory Exchange, will initially focus on payment platforms and digital assets. Participants will spend at least six months in the host organization, with the possibility of extending their time to a year. Adrienne Harris, the superintendent of the New York regulator, emphasized the importance of linking New York and London, stating that regulatory alignment is crucial in a world where financial services transcend geography.
Once back at their home offices, participants are expected to apply their expanded skills and insights to improve regulations. Jean-Louis Bravard, a former JP Morgan director, views this exchange as a step beyond basic collaboration. He believes it’s a “3D approach” to tackling regulatory challenges compared to the usual 2D method of merely sharing notes. Bravard pointed out that, while the two regulators may approach problems differently, the tools they use are largely similar. He added that this knowledge-sharing can help both organizations fill skills gaps without resorting to outsourcing.
The initiative will foster cross-border cooperation, which is essential for the global market. Sarah Breeden, the Bank of England’s deputy governor for financial stability, highlighted that through shared knowledge, they can bolster efforts toward global financial stability and encourage innovation in payments and markets.
Chris Skinner, a commentator in the financial sector, called this partnership a “win-win.” He noted that both the US and UK see themselves as pioneers in the fintech space. The US offers insights into how tech giants view digital assets, while the UK provides access to a thriving fintech ecosystem with its advanced startup scene.
In the context of emerging payments and digital assets, David Bannister from GreySpark Partners highlighted that the US could benefit significantly from the UK’s experience with payment systems. He remarked that the US payment infrastructure has lagged behind and only recently shifted towards favoring electronic over traditional methods like checks. Regarding digital assets, Bannister pointed out that international cooperation is crucial as the field is rapidly evolving.
This cooperation is likely to extend beyond payments and digital assets into other areas where technology plays a critical role. With the increasing use of artificial intelligence in banking and the persistent threat of cybercrime, regulators face constant challenges in keeping pace with technology. One senior IT executive in the UK banking sector warned that AI could lead to the next major banking scandal. He highlighted a pattern of banks pushing boundaries until something goes wrong, recalling past issues like subprime mortgages and payment protection insurance.