TFG’s Joana Fabiao (JF) sat down with Victoria Cleland (VC), the Executive Director for Banking, Payments and Innovation at the Bank of England for City Week 2021, to discuss how to drive innovation in the banking industry, the next generation of RTGS and diversity and inclusion within the industry.

Road to the Bank of England

JF: What is your “backstory”? Tell us a little more about your role at the Bank of England.

VC: I joined the Bank of England soon after leaving university and have been “here” (although currently working from home) ever since. I have undertaken a wide range of interesting, impactful and meaningful roles. It is the breadth of opportunity coupled with contributing to the Bank’s mission – to promote the good of the public in the UK through maintaining monetary and financial stability – that has kept me engaged for so long. I have been Executive Director for Banking, Payments and Innovation since 2018: leading a team who are right at the heart of delivering the Bank’s mission. 

Key responsibilities include: 

  • providing banking services to the UK Government and around 150 central banks
  • running our gold vaults containing about 400,000 gold bars and the provision if needed of Emergency Liquidity Assistance
  • running the Real-Time Gross Settlement (RTGS) service which is the beating heart of payments in the UK, settling an average of £700bn each working day. 

Almost all electronic payments in the UK will interact with RTGS in some shape or form, so ensuring it is resilient is paramount to the UK economy. 

Career highlights

A couple of highlights include establishing the Special Resolution Unit during the financial crisis, working on key resolutions including Northern Rock; and a number of years as the Chief Cashier.  And the really exciting thing about being Chief Cashier is that one signs the banknotes, which during my tenure we moved from paper to polymer. 

Central banks as drivers of innovation

JF: The Bank for International Settlement and the Bank of England have recently introduced the BIS Innovation Hub London Centre. Can you tell us more about this initiative?

VC: We launched the BIS Innovation Hub London centre in June: a really exciting milestone. This is one of a small number of Hubs operating across the globe, with a focus on the role that central banks can play during this transformational time in financial innovation and technology. Whilst the Centre will be physically based in the Bank’s offices in London, it will draw on a vast array of fintech and financial expertise from right across the UK. 

The London Centre will play an instrumental role in helping to develop and provide global infrastructure to support safe innovation across the world. There is a lot of innovation underway which can transform the global financial system. While the private sector can create technological and commercial innovation, the public sector has a vital role in enabling and channelling its development so that it can provide efficient and safe finance for consumers and businesses across the country. The Bank welcomes financial innovation and works to ensure we are as technologically enabled as appropriate, supporting our mandate of financial and monetary stability.

The BIS Innovation Hub London Centre’s agenda is at the heart of this global cooperation between central banks. The BIS Innovation Hubs are currently working on future financial market infrastructure, central bank digital currencies, open finance, regtech and suptech, cybersecurity, and green finance. I am very excited that my area of the Bank is hosting the London Centre and am very much looking forward to contributing to and benefiting from its creative thinking. 

The next generation of the Bank’s real-time gross settlement (RTGS) service

JF: You recently spoke about how the introduction of non-banks to the RTGS service could increase innovation. Can you speak about why that is?

VC: We are currently undertaking an important and ambitious programme to renew the RTGS infrastructure. 

The vision for the new RTGS will revolve around:

  • increased resilience and access
  • wider interoperability
  • improved user functionality
  • strengthened end-to-end risk

While resilience is at the core of our vision, our ambition is also to use the new service to promote innovation and competition, and an important part of this is increasing not just the number, but also the type of players who have direct access to the system. 

In 2017 the Bank of England introduced a new policy to extend direct access to RTGS settlement accounts to non-bank payment service providers (NBPSPs), in particular qualifying E-Money Institutions and Payment Institutions authorised in the United Kingdom. Transferwise, now Wise, was the first to join and has been followed by others, with more in the pipeline.  These institutions use RTGS accounts to directly access the UK’s sterling payment systems, particularly Faster Payments. 

RTGS access for non-banks reduces their dependence on competitors, gives them greater control over their payment flows and full flexibility on their technology choices. These benefits enable NBPSPs to provide payment services on a more level playing field with banks and to offer a wider range of payment products to their customers. 

In the longer term, the innovation which stems from this policy change promotes financial stability by: 

  • Creating more diverse payment arrangements with fewer single points of failure
  • Identifying and developing new risk-reducing technologies; and
  • Expanding the range of transactions that can take place electronically and be settled in central bank money.

Extending RTGS access to NBPSPs required a comprehensive risk management framework, to ensure that the resilience of RTGS and the broader sterling payment system are maintained.  And as part of the renewed RTGS were are seeking to make the joining process easier and smoother, hopefully attracting more players.

Realising this vision also needs the industry to meet key milestones, the first of which is June 2022. It will only be through our collaborative endeavours that we can deliver this exciting vision for future payments.

Inequality, diversity and inclusion: why it matters now more than ever

JF: You’re an influential woman in finance, having held several leadership positions throughout your career. What pieces of advice would you give other women entering their careers right now, given the current market, and continued challenges around gender inequality?

VC: It is great that you are asking this question:  it is crucial that issues around inequality, diversity and inclusion are tackled head-on. However, t it is also really important to think broadly when we discuss diversity. The Bank of England has recently published our new diversity targets for gender and ethnicity, and we are also considering how to extend these further to cover other protected characteristics, such as social mobility: striving for a truly diverse organisation. This is particularly important to me in my role as Executive Sponsor for our disAbility Network.

While there is clearly still more to do to increase diversity, in particular at senior levels, the Bank has changed enormously since I first joined, and while advice from experts and role models is helpful, to really make a difference needs commitment from the top of the organisation and strong investment to create a strong and sustainable pipeline of diverse talent. The Bank’s targets are, therefore, supported by the development of clear action plans and the introduction of processes to support truly effective accountability. 

My advice, in a nutshell, believe in yourself and be true to yourself. Don’t you be the one to limit your ambition!

EBRD’s President on: COVID-19, sustainable trade and the gender gap in finance

TFG supports women in trade, find out about TFG’s recent campaign to support Women in Trade here.