The Financial Conduct Authority’s chief data, information and intelligence officer Jessica Rusu has said technology can be “a force for good” but comes with many risks.
Speaking at the Money 2020 Amsterdam event last week (June 8), Rusu explained that the increase in firms suffering from cyber-attacks demonstrates the risks that arise through innovation.
“Looking through the lens of a regulator, having spent many years in big tech, fintech and traditional banking roles – I see that innovation and the role of technology in transforming markets is both a risk to finance, as well as an opportunity,” she said.
"The forces of digital revolution continue to see growth in fintech, as well as new business models powered by artificial intelligence. And while this technology can be a force for good, we also see an increase in firms suffering from cyber-attacks.”
Rusu explained that many consumers are considering alternative forms of finance such as crypto.
She said a recent study found that 55 per cent of Bitcoin holders bought it for the first time last year and now, one in five UK residents own some form of crypto.
“Regulators are right to be concerned, particularly in light of the $60bn (£49bn) collapse of the so-called stablecoins Luna and TerraUSD in May, with consequently distressing impacts on retail consumers,” she said.
“There continue to be significant risks, especially for retail consumers, many of whom are enticed to purchase unsuitable or inappropriate products via social media.”
Globalisation and technology combined
Rusu argued that globalisation and technology have led to a dramatic transformation in finance, and as the worlds of legacy finance and new finance continue to collide, there is “exponential growth in innovative business models”.
“Macro events including climate change, post-Brexit transition, war in Ukraine, and the rapidly escalating cost of living crisis continue to bring new challenges,” she said.
“For example, as the war in Ukraine drives up energy prices, inflation is at a 30-year high, and the Bank of England has warned that inflation might reach 10 per cent within months, and this will have a profound impact on consumer credit.”
She explained that the FCA’s data strategy outlines the investments it is making in technology and data to become more innovative, assertive, and adaptive in carrying out its role as a regulator.
“We are transforming our platform, building new tools, and growing our capabilities to deliver changes across the entire data and technology pyramid,” she added.
“We are modernising our enterprise architecture to a cloud-based infrastructure, with strengthened security and operational resiliency.”
The FCA is also expanding its data with new sources of intelligence such as scraping over 100,000 websites daily to identify scams and fraud.
Rusu said: “I believe the next few years will bring about significant innovation and change in financial services. And whilst, as technophiles, we find many of these changes exciting, we also see before us a collective call to action to embrace the benefits of innovation while addressing the risks to consumers.
“When used correctly and responsibly, data and technology can offer faster, more efficient, and more secure services to consumers that empower them to make appropriate choices and protect their personal data.”
She concluded that her role is about equipping the FCA with tools that encourage responsible innovation, and also enable the regulators to understand and respond to the risks as they arise.
In February, FCA director of digital and intelligence Ian Phoenix said data will be the ‘blood flow’ to the organisation and will help staff hone in on their expertise, as part of its focus to become a data-led regulator.
sonia.rach@ft.com
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