TECHNOLOGY
Q . There is a data governance issue at the heart of innovations like Open Finance . How do you envisage this being counternanced ? SN : Data governance is not unique to Open Finance : data is a unique asset at the moment , from which funds are trying to drive strategic value . Previously , one looked at data governance just around regulatory reporting , but now you also need to consider it in the context of artificial intelligence .
The conversation surrounding how to use data ethically presents a big challenge ; let ' s take it right up to board level , get some strategies in place , establish accountability , and control data in the right way .
HK : PSD2 in the EU has opened up countless possibilities for innovation , including direct payment processing from platforms or applications , data analytics on aggregated bank accounts , split payment technology , and enhanced credit risk modelling . They do come with compliance strings attached , but most fintechs are often mindful of this and have built their data stacks to be far more robust than legacy bank systems .
Q . Moving forward , what ’ s the best way for fintechs and regulators to approach governance ? HK : The growing regulatory environment has created and will continue to create risk management requirements for fintechs . I believe the ability of fintechs to proactively identify and address these risks through effective risk management programmes will significantly impact their success and competitive edge going forward .
BR : Governance will always be an issue that ’ s ‘ in flux ’. Firms need constantly to reconsider their approach , to accommodate market and regulatory developments and to identify opportunities . The regulators should
be subtle and sensitive to business models and only intervene where necessary .
It ' s intriguing that no one has yet created a ‘ global fintech ’; I don ' t see why it couldn ’ t happen , and companies can use regulatory governance as part of their marketing proposition . There just has to be innovative thinking about how services can be structured in legal and regulatory terms , under a single , coherent , permissive legal regime such as that of the UK .
SN : The most successful startups in the regulated space will be those who act like a regulated bank or firm from the start of their business model . Diversity and skill set at board level will also be fundamental ; after a fintech has mobilised , its C-suite will need to understand how regulatory requirements impact the company ’ s technology and shape the solutions it offers .
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