A new report by TheCityUK and Deloitte presents the strategic benefits, increased efficiencies and cost savings that could result from government, regulators and financial firms working together to develop shared digital platforms.
Such an approach would help to more efficiently tackle everyday activities such as customer background checks, regulatory reporting and fraud prevention.
The report, ‘Splitting the Bill: The role for shared platforms in financial services regulation’, commissioned by the Financial Services Trade and Investment Board (FSTIB), also makes recommendations on how to overcome the potential barriers to embedding these new platforms.
Miles Celic, Chief Executive Officer, TheCityUK, 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. The UK already has an established reputation as a global leader in FinTech, and it’s clear that these platforms are key to the UK maintaining its lead on the regulatory front and would provide a key export of UK FinTech expertise. By developing new shared digital platforms, the industry could reduce costs, increase regulatory efficiency, and improve customer experience.”
Louise Brett, Head of FinTech, Partner, Deloitte, said,
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. While we believe there are a broad range of areas where progress can be made, we have focused on two which have particular potential benefits for the industry and customers: Know Your Customer functions and regulatory reporting.”
Know Your Customer
The report found that optimising Know Your Customer processes and creating a shared industry Know Your Customer platform could help disrupt and prevent potentially criminal activity, money laundering and fraud. By taking a proactive approach to managing client identity and risk, a shared platform has the potential to increase the speed and accuracy of checking for customers, while also reducing the costs of the checks for providers and regulators.
A shared platform approach for regulatory requirements, based on a distributed or shared ledger, is already being piloted and offers benefits such as improved, more granular data security, and the ability for firms to submit data on an ongoing basis, rather than waiting for periodic submissions. Given regulatory reporting is often open to a degree of interpretation and can result in significant duplication across the industry, a shared platform approach will help to improve consistency and avoid time consuming double analysis and unnecessary follow up requests.
Nathan Bostock, Chief Executive Officer, Santander UK, and Chair of the FSTIB FinTech Working Group, said,
The digitalisation of the market is driving change at an unprecedented pace, challenging firms and regulators to respond. Many of these challenges are best met with a collective response – working together with regulators to find common solutions which benefit everyone, while keeping costs down. Breaking down the barriers to implementing these is critical for progress in this area.”
“The recommendations in this report are fundamentally about updating our current processes for the digital age. The UK is ideally placed to leverage its globally leading position and understanding of financial markets to drive innovation in the market for years to come.”