The Financial Conduct Authority could incentivise more data sharing between Big Tech and financial firms if it deems it useful for consumers.
In a speech at the Digital Regulation Cooperation Forum today (April 22), FCA chief executive Nikhil Rathi said Big Tech was “a priority”.
He said: “Big Tech’s growing emergence in financial services has already made life easier for consumers, but it is still unclear how valuable their data will become in financial markets.
“That’s why we want to work with Big Tech to examine how their data could be most helpful for financial firms and their customers in future, and to ensure competition evolves effectively.”
If the FCA’s analysis finds Big Tech data is valuable in financial services, it will look to incentivise more data sharing between Big Tech and financial firms through its open banking and broader open finance work.
If it finds potential risk or harms from non-sharing of data it will also look to develop proposals for the CMA to consider when they are given powers to regulate designated firms’ digital and data conduct.
“Data asymmetry may increase. Where that data is important in offering financial services, this data asymmetry will reduce competition, leading to reduced innovation and worse outcomes for consumers.
“There is also a risk that Big Tech firms become the primary access channel for retail financial services. This could squeeze out innovation from small players and also discourage the incumbent legacy institutions from continuing to invest.
“With Big Tech now an essential component of the financial services supply chain, there is also the risk that the combination of cloud, data and AI will cement Big Tech’s power in partnerships with firms across financial services and other sectors.
“We need more industry players to feel they have a part to play on the data pitch. Safe data sharing can benefit firms, markets and consumers,” Rathi added.
Response to AI paper
The FCA also responded to the government’s consultation on AI today, welcoming its “pro-innovation approach to AI”.
The regulator said it would continue to “closely monitor” the adoption of AI across financial markets and would keep under review if amendments to its existing regulatory regime is needed.
Rathi said: “Regulation will have to adapt to the speed, scale and complexity of AI.
“At the DRCF, we will continue to support the adoption of responsible AI through the AI and Digital Hub. We will also conduct joint research into consumer use and understanding of generative AI.”
The digital hub will provide informal advice for “tech innovators” for issues that cross more than one DRCF regulator’s remit.
In the FCA’s response, Jessica Rusu, chief data, information and intelligence officer, said: “Our response sets out that an evidence-based view, one that balances both the benefits and risks of AI, will ensure a proportionate and effective approach to the use of AI in financial services.
