COVID-19 has accelerated the take-up of digital transformation due to the need to conduct more business remotely through digital channels. Simultaneously, customers have shown a greater willingness to use technologies in which previously they may have lacked confidence.
In the ninth installment of the Finding Balance series, we take a closer look at the impact of new technology on financial institutions, in light of the COVID-19 pandemic. Here are some key takeaways from the report:
- The business models of financial institutions are changing: how services are delivered, the ways in which they can earn revenue and the search for new ways to monetize value.
- Regulators are supportive of fintech and profess to adopt a neutral stance when evaluating technologies; however, they are concerned with accountability and whether technology performs as expected and in compliance with legal requirements. Similarly, regulators worry about the potential for financial crime and consumer detriment, the risks from under-regulation and the threat to financial stability.
- Big technology companies are taking their place as an integral part of the financial services ecosystem, although they mainly focus on retail financial services to support their own platforms. On the other hand, regulators in China, the US and the EU are concerned about what they see as the potential for abuse in big tech’s technological and data advantages to dominate sectors of the market making more likely market intervention.
Traditional regulation often assumes that humans run the internal processes within financial institutions rather than technology. The adoption of regulatory monitoring, reporting and compliance, so-called “regtech,” will be a challenge for both businesses (in terms of complying with existing regulations) and regulators to develop new regulations and methods of supervision more appropriate for the present day.
You can read the full report – Finding Balance: The Impact of New Technology on Financial Institutions – to know more about how digital transformation is changing financial institutions.
You can also check previous installments of our Finding Balance: The Post-COVID Landscape for Financial Institutions covering the trends Sustainability in Financial Institutions, Increasing Regulatory Scrutiny of Financial Institutions, and The Phenomena of Rising Global Indebtedness and Alternative Financing.