Fintech Faces Fresh Wave of Scrutiny from Regulators

One of the biggest debates in banking and finance is the regulation of the fintech sector and how to protect consumers.

According to a new report by auditing firm KPMG UK, the pace of development in fintech is causing concern among regulators about harm to consumers and risks to the financial system.

As reported in CITY AM the report “raised concerns that an increasing reliance on just a handful of technology firms as well as the use of large data sets was posing risks to the financial system”.

The report highlights that although the benefits of new technologies are indisputable, the fast pace at which fintech firms are changing the industry is making it difficult for regulators and risk experts to keep up.

According to the report this poses three key risks: the increasing reliance on a small number of IT tech firms; the blurring boundaries of financial services and other sectors; and the use of big data sets.

The report highlights that consumers are at risk due to “a lack of consumer understanding; mis-selling of products and services; and data privacy, security and protection.”

As explained on the KPMG website:

“The list of regulatory and supervisory responses to fintech-related risks continues to lengthen. And this will continue to ratchet up over the coming years as the fintech sector and the adoption of fintech solutions continue to develop and grow.”

The report is available to download online and focuses on fintech-driven regulatory change.

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