On 23 January 2024, the FCA published a speech delivered by its Chief Executive, Nikhil Rathi, on ‘Leaning in on making consumer tech a force for good’. In the speech, delivered at the Imperial College London Business School, Mr Rathi addressed the question of how consumer-facing technology can help keep consumer markets honest.

Key points raised by Mr Rathi in his speech include:

  • In order to address the current ‘global inflection point’ in the rise of technology in financial services, the FCA must use and adapt its existing regulatory tools to protect consumers and markets while making sure it continues to embrace innovation.
  • The FCA also needs to be alert to competition impacts, noting that ‘big data’ must not be the preserve of Big Tech and that a digital identity authentication system and a commitment to Open Data could boost productivity and consumer confidence in how their data is used.
  • There is a need for a wider debate between policymakers, industry and consumers about what they are willing to risk in search of innovation and better products and services, and they must also acknowledge that it is not possible to mitigate all risk that arises from rapid adoption of new technologies.
  • Consumer facing technology in financial services should be used to boost financial inclusion and security of data and services; otherwise the industry risks triggering what Mr Rathi describes as a ‘Techlash’. Having industry involved and investing from the outset on financial inclusion will build societal trust.
  • Buy Now Pay Later (BNPL) is also flagged as an area that poses a risk and needs regulation. Mr Rathi notes that the biggest asset for BNPL firms is the data that they receive from both the consumer and the merchants, allowing them to offer the optimal repayment scheme based on patterns of individual consumer behaviour, with some firms even gathering information from social media accounts and web browsing.

In conclusion, Mr Rathi notes that while the FCA ‘cannot fully predict the future’, it is open for engagement and debate on this topic. He notes that the FCA should be at the forefront of enabling technological innovation, which means recognising that data is the preserve of the consumer and – with their permission – should be open to all, not just to the Big Tech firms.