FINTECH is opening up finance to previously excluded groups, showing that Big Data can be both profitable and socially beneficial, according to the chair of the Financial Conduct Authority (FCA).
In a speech delivered at the Reuters Newsmaker event in London, Charles Randell (pictured) heralded the UK’s “world leading” fintech industry’s efforts in boosting financial inclusion but underlined the need for high standards of data ethics.
“UK fintech firms are already using transactional data to identify creditworthy loan and mortgage customers who would be excluded from these products by traditional credit scoring risk assessments because of irregular earnings histories or long periods of renting,” said Randell.
“The Treasury’s Rent Recognition Challenge produced some great ideas for harnessing fintech to address financial exclusion, highlighting that Big Data can be profitable at the same time as it expands markets to serve a social purpose.”
Randell also noted that advances in Big Data, Artificial Intelligence, Machine Learning and Behavioural Science were calling into question current principles of regulation.
This applied specifically to the assumption that consumers should take responsibility for their decisions.
“If we can combine these skills with fair standards and with public trust, we can maximise the opportunities for the UK finance industry to succeed in the global market,” said Randell. “And we can revolutionise the quality, price and accessibility of financial services for consumers.”
He said that the foundations of good innovation – innovation which benefits society and which will be sustainable – must have three elements: purpose, people and trust.
“Technological innovation in financial services brings together two of the UK’s greatest assets and gives us the opportunity to lead the world in fintech,” Randell added.
“I would like the UK regulatory community to add another asset – the leadership in regulation that it has already shown through programmes like the FCA’s Project Innovate and the Sandbox, while safeguarding high standards of consumer protection.
“The UK already has a trusted legal and regulatory system and contributes to setting global standards of corporate governance and business ethics. We need to contribute to new standards for data ethics too.”
Read more: FCA unveils overdrafts crackdown