Homepeer to peer lendingFCA exec outlines regulator's data-led digital transformation

FCA exec outlines regulator’s data-led digital transformation

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An executive at the Financial Conduct Authority (FCA) has outlined the City watchdog’s digital transformation to support “significant innovation and change in financial services” in the coming years.

Speaking at Money20/20 Amsterdam, Jessica Rusu, chief data, information and intelligence officer at the FCA said that globalisation and technology have led to “a dramatic transformation in finance” with ” exponential growth in innovative business models”.

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She noted the “forces of digital revolution” that continue to see growth in fintech, and new business models powered by AI.

However, she warned that while this technology can be a force for good, there is also an increase in firms suffering from cyber-attacks.

She also highlighted rising consumer demand for cryptocurrency and said that “regulators are right to be concerned” given the asset class’s volatility and the risks for retail investors.

Speaking about the FCA’s role in supporting these innovations, Rusu said that the regulator is undergoing a digital transformation with its data strategy to become “more innovative, more assertive, and more adaptive”.

“We are working to improve the firm data we collect, as well as expanding our data with new sources of intelligence – for example we scrape over 100,000 websites daily to identify scams and fraud,” she said.

“We have expanded our innovation services, so that we are creating both an opportunity to deliver regulation in cooperation with subject matter experts and industry, as well as to help cutting-edge firms engage with us.

“We are delivering automation, risk triggers, and insight to authorisation, supervision, and enforcement, and leveraging advanced analytics to deliver proactive intelligence, triaging of new risks, and automation in casework.”

She noted FCA initiatives to support innovation, including the regulatory sandbox used by fintech start-ups.

“A record £30bn was invested in UK fintech companies in 2021,” she said. “To keep pace with a rapidly changing world and deliver on our commitments we offer a range of innovation services to promote competitiveness in the UK fintech market.

“The regulatory sandbox allows businesses to test innovative propositions in the live market  with real consumers, alongside regulatory oversight. 92 per cent of firms who have used the regulatory sandbox go on to become successfully authorised.”

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Rusu said when used correctly and responsibly, data and technology can offer faster, more efficient, and more secure services to consumers.

“I share this vision, and for me, my role is about equipping the FCA with tools that encourage responsible innovation, and also enable us as regulators to understand and respond to the risks as they arise,” she added.

“I’m encouraged by the progress of our transformation programme, and the idea that regulators can successfully harness the same forces that are transforming financial services, to provide more effective, proactive, and scalable regulation, to support innovation and effective competition, and protect consumers.”

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