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8 Fintech Predictions for 2019
Entities holding data need to ensure that they maintain users’ trust and operate within acceptable bounds as they leverage new data analytics technologies. Regulators are becoming interested in promoting fairness, ethics, accountability and transparency in the use and management of data.
Many see blockchain as a powerful tool for tracking real-world processes – for example, the completion of steps in a supply chain context - or in creating natively digital assets or workflows. The market is turning to look beyond proofs of concept, and towards implementing tangible products, solutions and engagements.
Innovative technology is a key component in a company’s success in a rapidly changing market. Investing strategically in technology allows a company to access talent and growth, propel its business to the forefront and keep step with the competition. But integrating new technology and new innovative ideas into your existing business presents its own challenges and introduces unique legal issues that need to be addressed.
There are few sectors that can claim to have changed as dramatically in the last few years as the payments sector. The pace of innovation, regulatory developments and technological advancement means that payments industry has faced unprecedented change, which has significantly altered the landscape of the industry and of the key participants operating within that sector. Ensuring payments businesses are able to meet future challenges and keep pace with developments in the payments world remains a key priority for those working in the sector.
As the threat and impact of cyberattacks on the financial sector is increasing, several leading jurisdictions are strengthening regulatory and supervisory practices to deal specifically with cyber risk, for example through notification requirements and proposals for an EU wide self-certification scheme. Supervisors are also looking to balance firms’ use of cloud services in delivering innovative financial products and services, while ensuring the related risks are controlled and managed. We expect to see increasing focus and regulatory clarity on these issues over the coming year.
Regulatory requirements are becoming increasingly detailed and stringent, as concerns mount regarding the potentially systemic risks of operational disruptions such as cyberattacks, IT systems upgrades (resulting in outages), data breaches, failure of third party service providers, outages of third party messaging services and flash crashes. Supervisory authorities are seeking a “step change” in firms’ preparedness to tackle disruption events.
There is specific concern around the potential for cryptoassets to cause harm to investors and market instability, which regulators will be looking to address. We expect greater regulatory clarify during 2019, but a key question will be the extent to which that regulatory action is coordinated effectively at a global level, or whether it leads to opportunities for regulatory arbitrage.
Financial crime impacts financial services in the form of money laundering, terrorist financing, bribery and corruption, fraud and breach of sanction. Countering financial crime is moving up regulators’ agendas globally and we expect that this will be a key focus for 2019. In terms of the tools available to banks enhanced anti-money laundering monitoring has been suggested as one of the most impactful use cases for AI in the financial services sector.