Nikhil Rathi, Chief Executive at the FCA, recently delivered a speech at The Economist, London, discussing the regulator’s approach to Big Tech and Artificial Intelligence.

Speaking at the Economist Impact, Finance transformed: exploring the intersection of finance 2.0 and web3 event on 12 July 2023, Rathi discussed the role of ‘AI solutions for human problems’.

Acknowledging the polarising view of AI technology, Rathi considered how it could either ‘displace today’s jobs or enable an explosion in future productivity’.

Discussing the opportunities of AI, Rathi noted there are many. Citing an Office for National Statistics (ONS) report – which shows that the UK had the lowest annual growth in worker productivity in the first quarter this year for a decade – he noted that: “There is optimism the AI can boost productivity.”

With reference to an April study by the National Bureau of Economic Research, Rathi explained how ‘productivity was boosted by 14%’ when over 5,000 customer support agents used an AI tool.

On the additional benefits that AI could bring to financial services, Rathi outlined how it could be used to:

• Help improve financial models and cut crime.
• Tackle the advice gap with better, more accurate information delivered to everyday investors, not just the wealthiest customers who can afford bespoke advice.
• The ability to hyper-personalise products and services to people, for example in the insurance market, better meeting their needs.
• The ability to tackle fraud and money laundering more quickly and accurately and at scale.

As a data-led regulator, Rathi outlined that they are ‘training their staff to make sure they can benefit from AI’. With developments in AI technology, he noted that it was ‘critical that we do not lose sight of our duty to protect the most vulnerable and to safeguard financial inclusion and access’.

With the Consumer Duty, coming into force this month, stipulating that firms must design products and services that aim to secure good consumer outcomes. And with firms having to demonstrate how all parts of their supply chain – from sales to after sales and distribution and digital infrastructure – deliver these, Rathi expressed that their ‘outcomes-based approach not only serves to protect but also encourage beneficial innovation’.