- Wednesday, May 01, 2024
He said that technology in financial services should prioritise boosting financial inclusion and data security
By: Pramod Thomas
THE chief of UK financial watchdog has emphasised the critical need for regulatory adaptation in the face of evolving consumer technology in financial services.
Nikhil Rathi, CEO of the Financial Conduct Authority (FCA), has outlined key points and scenarios, urging a wider debate between policymakers, industry stakeholders, and consumers in the sector.
While delivering a keynote speech at Imperial College London Business School on Tuesday (23), Rathi highlighted that the global surge in technology within financial services demands a careful balance between embracing innovation and safeguarding consumers and markets.
He stressed the importance of avoiding concentration of big data in the hands of a few major tech corporations, proposing the implementation of a digital identity authentication system and a commitment to Open Data to enhance productivity and instill consumer confidence in data usage.
The CEO underscored the necessity of an honest dialogue about the risks associated with rapid technology adoption. He emphasised that technology in financial services should prioritise boosting financial inclusion and data security to prevent a potential backlash, referred to as a “Techlash.”
In his engaging introduction, Rathi humorously touched on the intersection of personal lifestyle data, financial information, and environmental factors, showcasing the novel ways in which technology influences individual behaviour and choices.
He discussed the potential benefits and drawbacks of two distinct scenarios – a ‘Technology heavy adoption option” and a “Technology-lite option.”
The first envisages a hyper-digitised, super-personalised future where advanced technology integrates financial and public services seamlessly. Rathi highlighted potential benefits such as tailored customer products, increased financial inclusion, and heightened competition.
However, he also warned of the risks associated with hyper-personalisation, including the potential exclusion of certain consumer groups.
Contrastingly, the Technology-lite option presented a scenario with incremental progress in consumer technology, maintaining a preference for human contact over AI prompts. Rathi outlined potential downsides, including the entrenchment of current inequalities and a potential hindrance to innovation, job creation, and economic growth.
He concluded by discussing the future of regulation in the rapidly evolving landscape. He advocated for a balanced regulatory approach, emphasising the FCA’s shift towards outcomes-based regulation, as evident in the recently introduced consumer duty.
Rathi discussed the need for a societal debate on risk appetite, stressing the importance of fostering competition, preventing market consolidation, and promoting innovation while ensuring operational resilience and cybersecurity.
He also expressed the FCA’s commitment to working across traditional boundaries, collaborating with international peers, and addressing challenges such as data access and operational resilience.
He urged the financial industry to actively participate in promoting financial inclusion and innovation, showcasing the FCA’s Financial Inclusion TechSprint as an opportunity for industry involvement.
The FCA boss also called for open dialogue and collaborative efforts to navigate the challenges and opportunities presented by the dynamic intersection of technology and financial services.
