In a key announcement, FCA CEO Nikhil Rathi has highlighted the crucial role of Big Tech companies in enhancing financial services.
The speech coincided with the release of a feedback statement by the FCA in response to its inquiry into the data-sharing practices between Big Tech and financial services entities. This inquiry is part of a broader discussion initiated by the government’s White Paper on Artificial Intelligence, also published today.
Nikhil Rathi emphasized the potential benefits that Big Tech’s vast data resources could offer to the financial sector. He noted that while Big Tech’s integration into financial services has simplified consumer transactions, the full value of their data in financial markets remains to be assessed. “Big Tech’s growing emergence in financial services has already made life easier for consumers, but it is still unclear how valuable their data will become in financial markets,” said Rathi.
The FCA’s current approach allows Big Tech firms to access data through Open Banking protocols, without reciprocating data sharing with the financial sector. However, the feedback from their latest inquiry could lead to significant changes. If the investigation demonstrates that Big Tech data holds substantial value for financial services, the FCA plans to promote enhanced data sharing. This initiative would be part of a larger push within its Open Banking and Open Finance frameworks.
Moreover, the FCA is considering regulatory proposals to mitigate potential risks associated with the asymmetric sharing of data. These proposals would be reviewed by the Competition and Markets Authority (CMA) when they receive the authority to regulate designated firms’ digital and data activities through the forthcoming Digital Markets, Competition and Consumers (DMCC) Bill.
Rathi’s remarks underscore a proactive regulatory stance on ensuring competitive equity in the digital age. The FCA, alongside the Bank of England and the Prudential Regulation Authority (PRA), is also continuing to explore the impact of critical third parties and AI technologies in finance.
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