Home Policy & Governance ‘I sensed the word “innovation” was very anxiety-inducing’: Fed innovation chief

‘I sensed the word “innovation” was very anxiety-inducing’: Fed innovation chief

BIS Innovation Summit panel (from L-R): BIS head of communications Jill Forde (moderator), Margarita Delgado (Bank of Spain), Pablo García (Central Bank of Chile), Changchun Mu (People's Bank of China’s Digital Currency Institute) and Sunayna Tuteja (Federal Reserve System) | Global Government Fintech screenshot from event broadcast

The Federal Reserve System’s first chief innovation officer has described the cultural challenge of encouraging cautious central bankers to embrace innovation – and how leaders can try to “reduce anxiety” about investing in new technologies.

Sunayna Tuteja is more than two years into her newly created position at the Fed, where her remit includes encouraging an ethos of collaboration and technological experimentation across the US central banking system.

“I talked to over 800 people within the Federal Reserve System in my [first] 100 days,” Tuteja told the audience at a conference in Switzerland. “I asked the same three questions: what does innovation mean to you (from your span of control within the Fed)? What do you hope that the person in this role will do? And what is the one thing you fear the person in this role would do?”.

“I sensed that the word ‘innovation’ was very anxiety-inducing,” she said, going on to present a series of thoughts about how central banks should approach innovation, which she described as being fundamentally about “change management and problem-solving”.

Tuteja, who moved to the Fed from the US stockbroking company TD Ameritrade, was speaking during a panel discussion hosted by the Bank for International Settlements (BIS). Innovation, she said, should be “less about chasing shiny objects, or FOMO-driven innovation (fear of missing out), and more about really driving utility and value for the institution.”


Tracking innovation’s value

Tuteja – who was included in Global Government Fintech’s  ’23 people to watch in 2023’ – said that interest and investment in innovation must be “evergreen” instead of facing a “volatility curve”.

“When budgets are tight, when there’s a lot of uncertainty, what’s the first ‘line item’ people go to?”, she asked rhetorically. “I think we all, as leaders, have a role to actually say ‘no, it is during times of uncertainty, the unknown, the chaos, when innovation is the most important’. When your budgets are tight, you actually want to ‘lean into’ innovation because it can help you drive efficiencies and optimisation.”

“At the Fed, we [have] instituted running innovation like a true business discipline,” she said. “We use OKRs – objectives and key results – because, even if we’re not shipping widgets every day that can be quantified, we owe it to the organisation to say, ‘for every investment that you make in innovation, this is the value accrued back to you in the form of OKRs’,” she said.

She added that OKRs “do a really good job of showing interconnectedness”. “I would hazard a guess that none of you who drive innovation in your institution are doing it in a silo – you’re creating collaborative webs across your organisation. OKRs can help drive accountability.”

She referred to the third question she asked colleagues during her first 100 days. Responses had often revealed fears that innovation programmes would be “top-down” in hierarchical terms – something that would be “an anathema” to innovation, she said, adding that “the best innovation comes from colleagues who are closest to the end-process and product at the end-customer”. 

‘It’s about progress not perfection’

Tuteja was speaking on a panel discussing ‘The process of technological innovation at central banks’ on 22 March. The session was part of the two-day ‘BIS Innovation Summit 2023: Technological innovation in an age of uncertainty’ conference.

“One thing that I’ve picked up about central bankers is you strive for the ultimate perfection – and until a document has gone through 1,822 reviews and every grammar check, it can’t be published,” she said. “I think that in that culture, as leaders, we have to help people understand that it’s about progress not perfection.”

In a similar vein she referred to central banks’ mounting interest in technologies such as distributed-ledger technology and artificial intelligence (AI). “For AI, machine learning, there’s no playbook – it’s akin to building the plane while you’re flying the plane, which means it’s not going to be perfect,” she said.

“Sometimes you have to get results ‘out in the wild’,” she continued. “In the lab, in a simulated environment, everything can be perfect, but it’s when it goes into the wild, that you really start to understand how you continue to ‘level up’ that product and that innovation that you’ve delivered.”

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Need for ‘more tempo’

Much of the session compared innovation in the public sector with innovation in the private sector, with Tuteja saying that she has observed “more convergence than divergence” between the two during the past couple of years.

By way of example she mentioned processes “that we know work in the private sector, whether it’s design thinking, or [project management terms] Scrum and Agile”, saying that she has seen central banks “hav[ing] leaned in very aggressively in adopting a lot of these techniques, not just in rhetoric but in action.”

Unlike the private sector, central banks are “not optimising for profitability”, she pointed out. But they do have scale. “I think that sometimes we don’t appreciate how powerful our scale is,” she reflected. “I worked in the private sector at a start-up – all you crave for was that scale.”

She referenced the BIS Innovation Hub’s offices worldwide. “If we can just introduce more tempo and metabolism to [add to] our [central banks’] scale, I think the curve of the impact we can all collectively make – and I know the work that BIS Innovation Hubs are doing – it can definitely be a force multiplier,” she said.

But “obsession about the consumer experience” is as important even without a profit motive. “The end-consumer is moving at a velocity that we have to catch up because they’re not waiting for us,” she warned. “And I think that imperative for innovation is the same whether you’re in a central banking or private-sector context.”


Innovation investment

The session also featured People’s Bank of China Digital Currency Institute director-general Changchun Mu (see separate article), Bank of Spain deputy governor Margarita Delgado and Central Bank of Chile vice-governor Pablo García.

Spanish regulatory authorities’ sandbox (‘Sandbox financiero’: a test space to allow fintech-based initiatives to conduct ‘live’ experiments under regulatory supervision) was mentioned by Delgado as an example of an innovative initiative. She described the sandbox (which welcomed its first fintech projects in 2021) as having “proven to be very fertile ground to touch base with market players on quite a broad range of initiatives, from blockchain, artificial intelligence, cloud computing, biometric authentication – some from the fintech community, but many from big banks.”

Increased investment in data was among the priorities mentioned by García, who said that Chile’s central bank had “pushed for more data sources”. Closer relationships have been forged, he said, with government bodies to enable the collation of “very granular” data at a business and individual level to better “detect and evaluate very precisely” economic activity.

This investment in data collection and analysis has also brought data privacy implications, he added. “We [have] change[d] our way of dealing with data, in the sense of having a single point of entry, having a data governance committee, having a technological programme to improve our management of databases,” he said.


The Global Government Fintech Lab 2023 will be taking place in Dublin on Thursday 18 May. The Lab, our one-day event for senior public servants interested in exploring and implementing fintech solutions, is being organised in partnership with Ireland’s Department of Finance. The event, which is free to attend for all public servants, will feature keynote speeches, panels and breakout sessions focused on fintech-related opportunities and challenges for those working in central government, agencies and other public authorities.