Context
The FCA has published a speech delivered by Nikhil Rathi, FCA Chief Executive, at the Imperial College London Business School asking ‘how can consumer-facing technology help keep consumer markets honest?’. Rathi in particular has urged caution for insurers considering a ‘hyper-digitised’ technology-heavy adoption option might not suit everyone. ‘Buy now pay later’ (BNPL) was also highlighted as an area of concern which poses to consumers, and which needs to be regulated.
Key points to note and next actions
The key messages in the speech were:
- We are at a global inflection point in the rise of technology in financial services and must use and adapt our existing regulatory tools to protect consumers and markets while making sure we continue to embrace innovation.
- We must be alert to competition impacts. Big data must not be the preserve of Big Tech: A digital identity authentication system and a commitment to Open Data could boost productivity and consumer confidence in how their data is used.
- A wider debate between policymakers, industry and consumers is needed about what we are willing to risk in search of innovation and better products and services – and we must be honest that we cannot mitigate all risk that arises from rapid adoption of new technologies.
- Consumer facing technology in financial services should be used to boost financial inclusion and security of data and services, or the industry risks triggering a Techlash.
The speech is structured under a number of headings, as follows:
- The future for consumer tech in financial services
- Technology-heavy adoption option
- Technology-lite option
- What the future holds for regulation
- Our appetite for risk and innovation
- The consequences for competition
- Regulatory approach and partnership
- Supporting large open datasets and digital infrastructure
- Operational resilience
- Financial exclusion and the potential for technological solutions
- Conclusion