Technological innovation by financial services in the UK still lags behind other industries, but perhaps the biggest challenge is from social media and technology companies based in the US.
We are already starting to see the introduction of new products and services from the US that have the potential to disintermediate UK financial services companies from their customers. There is therefore a pressing need for us to set the pace on the digitisation of the UK market if we are to see off this challenge.
The FCA recognises this and in 2014 launched Project Innovate in an attempt to ensure that the regulatory regime supports the development of innovative products and services that can benefit the consumer. Regulation is often seen as a hindrance to innovation and the FCA’s recent call for input on the barriers that regulation poses to innovation in digital and mobile solutions sought to explore this.
It is a topic Tisa’s Technology Innovation policy council is focused on as we work with The Savings & Investments Policy project team to develop a Digital Passport.
The European Commission also sees the creation of a digital single market as a priority and has introduced a strategy to make the EU’s single market fit for the digital age.
The EC claims that tearing down the regulatory walls and moving from 28 national markets to a single one could contribute €415bn (£306bn) a year to the economy and create hundreds of thousands of new jobs.
Whether we look solely at the UK or consider the wider EU implications, there is a similarity with the barriers that have to be overcome if we are to build a data-driven economy which functions properly, or which can reach its full potential.
So what are the barriers? Some are technical, some are administrative or legal. It could be as simple as slow internet connections in parts of the UK and as we travel around Europe. Technical disparities can prevent networks and devices from linking smoothly together because they cannot be properly connected, or because of a difference in the standards being used. Copyright and consumer law can also vary between member states.
The EU Digital Single Market strategy sets out to address immediate issues, as well as looking to the future. Andrus Ansip, the EU Digital Commissioner, sees it as rather like building a house – you do it from the bottom up. As a start, decisions to end roaming charges are being finalised so that from June 2017 when we travel in the EU mobile phone users will pay the same price as they would at home with no additional charges.
If you ask the EU Commissioner to express views about the digital future of Europe or indeed, of the whole world, he would do it with one word – data. The digital economy revolves around data. It is the driving force behind the three main elements of productivity, innovation and digitalisation.
