FINANCIAL firms should come together to create shared digital platforms to crack down on fraud, cut costs and boost customer service, a report claims.
A new report by TheCityUK and Deloitte, called ‘Splitting the Bill – The role for shared platforms in financial services regulation’, said that government, regulators and financial firms should work together to develop shared platforms, so they could more efficiently tackle customer background checks, regulatory reporting and fraud prevention.
It added that the UK’s world-leading fintech sector has the innovative skills needed to create these platforms and export these to other nations boosting the economy.
The report, commissioned by the Financial Services Trade and Investment Board, looked at the potential use of shared platforms across services such as trade finance, collateral management and syndicated loans processes.
It found that two areas – know your customer (KYC) and regulatory reporting – merited further study and investigation.
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The analysis stated that KYC, which must be carried out by financial services organisations before they can take on customers is at present a “manual and intensive” process. For customers that are shopping around for services, or who have complex requirements, the process may need to be carried out by many potential providers.
By sharing the data on a single platform firms could increase the speed and accuracy of customer checks and reduce operational and administrative costs.
It would also help disrupt and prevent potentially criminal activity, money laundering and fraud.
Despite some concerns over data integration and security, the report recommended the establishment of a working group involving government, regulators and industry to look at potential models.
A similar working group should also be formed to look at a shared platform – based on a distributed or shared ledger – for regulatory reporting to help standardise and automate financial service regulations.
It would also allow firms to submit data on an ongoing basis, rather than waiting for periodic submissions. A shared platform approach would, in addition, help to improve consistency and avoid time consuming double analysis and unnecessary follow up requests, the report said.
“Financial services firms face many new and diverse challenges – from the complexities of the data revolution, to the threat of cybercrime, and increasing customer expectations for quicker and more bespoke services,” said Miles Celic, chief executive of TheCityUK.
Louise Brett, head of fintech at Deloitte, said developing new shared digital platforms could reduce costs, increase regulatory efficiency, and improve customer experiences.
“New digital platforms with regulatory backing have the potential to bring significant strategic benefits to both incumbents and our leading fintech industry, greater transparency and better customer outcomes,” she added.