Chief Executive of FCA, Nikhil Rathi, has spoken on how consumer-facing technology helps to keep consumer markets “honest”. The key highlights from his speech were:
- FCA must use and adapt existing regulatory tools to protect consumers and markets while embracing innovation;
- FCA wants competition and innovation to flourish, but wants to avoid barriers to market entry put up by monopolistic suppliers of the latest tech. In the short term, Big Tech’s entry into financial services could benefit many customers but the benefits of competition could be eroded if these firms exploit their entrenched market power;
- Productivity and consumer confidence in how data is used could be boosted through a digital identity authentication system and a commitment to Open Data;
- Not all risks that arise from the adoption of new technologies can be mitigated – it is up to policymakers, industry and consumer to decide what risks they will accept;
- There must be a greater commitment to financial education to eliminate the risks of financial exclusion; and
- Consumer facing technology in financial services should be used to boost financial inclusion and security of data and services.
He noted that thanks to AI, firms can now have a wide range of data on individuals, and the challenge is whether consumers need to let them have it all. He gave examples of when consumers could feel either helped or hindered by decisions firms make on the basis of this “smorgasbord” of data. But generally, he said, both non-outliers and outliers can benefit, and easier switching leads to better competition. He said all this sounds good, but there is a risk that the tech and banking giants will subsume the competition, and new forms of fraud will at best undermine customer trust in technology. The alternative, a “technology lite” options, though, while providing more human interface and less risk of tech failures, probably on balance has more downsides. The need to decide which way to go, or in fact to take a “semi-skimmed” approach, is what will drive FCA’s priorities.