In 1878, just a few years after an early version of the incandescent lightbulb had been invented by English physicist Joseph Swan, a British parliamentary report on the new technology termed it “good enough for our transatlantic friends, but unworthy of the attention of practical or scientific men.” 

A century and a half later, the UK is trying to position itself to once again become a leader in emerging technologies by taking the inventions of its “transatlantic friends” on board and facilitating implementation and development in its domestic financial sector.

In a paper published last week, the Bank of England unveiled its future approach to artificial intelligence (AI), distributed ledger technology (DLT), and quantum computing in the financial sector. The three emerging technologies form what the report calls a “new wave of technological innovation,” comparable with the communications revolution of the 19th century that brought the world the light bulb and enabled international banking to start.

Overall, the Bank’s vision is one of close consultation and collaboration with private companies and players in the financial sector to find the sweet spot between enabling innovation and preventing risks, including shocks to the national economy. This is intended to encourage the financial services sector to “responsibly adopt technology to improve the services to – and financing for – the real economy,” countering the UK’s slowing GDP growth and ageing workforce. 

The paper outlines the Bank’s recent and future approaches to the three technologies, which it is hoped could bring about an economic renaissance for the UK. The three-pronged approach to the new technologies involves the Bank engaging with innovators, identifying barriers to development, and collaborating with domestic and international authorities to facilitate sustainable growth. 

AI, the growing behemoth

AI’s potential is clear in nearly every industry across the world, but it could especially transform the UK’s economy, potentially doubling its annual GDP growth rate by 2035. In the financial services sector, AI could automate routine tasks to free up workers to focus on revenue-making activities; the usage of AI to analyse data and enact precise dynamic pricing could also increase profits. 

The main risks associated with AI identified by the report include:

1. Increased possibility of cyberattacks executed through or with the help of AI
2. Operational risks due to relying on third (and fourth) party providers outside the financial sector, which are less supervised and regulated
3. Increased possibility of correlated outcomes in financial markets
4. Model and data-related risks, including AI models trained on incomplete, incorrect, or private data
5. Lack of transparency and accountability for highly autonomous AI models used in high-risk settings

The Bank’s activities around AI innovation and regulation have been in place for several years, with the paper stating its “regulatory framework has proven to be well equipped to support regulated firms’ use of AI so far.” 

In the future, its plans will be centred around the development of further regulation, so that specific guidelines are enacted “before usage reaches systemic scale”. These plans include:

1. Members of the Bank’s AI Consortium, the group of AI experts launched in May 2025, exploring specific challenges and risks related to AI, such as third-party providers and AI transparency
2. The Bank of England building up its capabilities for AI surveillance and monitoring
3. Working together with firms on regulation and ways to support AI adoption, including the development of specific guidelines (such as Supervisory Statements) to give firms clarity without stifling innovation
4. Regulating AI training data, including safeguards on confidentiality and data protection

Revolutionary DLT

If enacted at a scale, the paper finds DLT could “fundamentally rewire parts of the financial system” to potentially make them “more operationally resilient than current legacy systems.” The Bank’s approach to DLT regulation in the future will feature:

1. The recently launched DLT Innovation Challenge, in collaboration with the BIS Innovation Hub London Centre, which is exploring the possibility of “wholesale central bank money [that is] securely transacted and settled on external, programmable ledgers not controlled by the central bank.” 
2. Designing a synchronised settlement interface to allow real-time gross settlement (RTGS) to interoperate with external ledgers, including ones based on DLT 
3. Considering extended RTGS settlement hours to enable integration with “always-on” payment solutions, a key attraction of DLT
4. Assessing the case for a UK retail central bank digital currency (CBDC) and establishing a regulatory regime for retail stablecoins, with a proposed regulatory regime for systemic stablecoins set to come out by the end of 2025
5. Developing an approach to implementing the Basel standard to cryptoasset exposures in the UK

The quantum question

Quantum computing was the least explored of the new technologies, as despite its enormous capabilities, few mainstream uses in financial services have been found yet. For now, the Bank’s approach seems to centre on managing quantum computing’s risks around asymmetric cryptography decryption and using the same technology to protect the global banking infrastructure from them. Its future approach to quantum computing will include:

1. Piloting a supervisory briefing on quantum risks
2. Continuing research into the risks and opportunities of quantum computing in the financial services sector
3. Encouraging upskilling within the financial sector to raise awareness of the cybersecurity risks of quantum computing, including “harvest now, decrypt later” schemes

The verdict

While it may be lacking in shiny new policy proposals, the Bank of England’s plan offers a broad-ranging view of the most exciting opportunities – and most significant risks – of the biggest technological innovations today. 

“This is a very welcome initiative by the Bank of England; not only to one significant development but to three – all of which are inextricably linked to one another, and to the future of the economy as a whole,” Sarah Green, blockchain expert and Professor at the University of Bristol, told Trade Finance Global (TFG).

Unlike Parliament’s approach to the light bulb, the new paper presents a regulator that is optimistic about the changes brought by new technologies and aware of what players in the financial sector need to enact them.