The pandemic has been a technological catalyst. It has caused change on a greater scale and at a faster pace than any firm's planned IT strategy or any regulatory initiative. Initial lockdown measures to manage the pandemic caused years of change to take place in months, as firms moved to, and continue to operate, large-scale remote working. Disruption by new technologies became more palatable during the pandemic, resulting in faster adoption and progress, but introducing risks that will outlast the pandemic and its after-effects. Regulators are keen to adjust regulation to enable moves to digital finance, in all its forms, and to manage the risks.
Key regulatory topics covered in this paper include:
- Encouraging and regulating new types of firms and technological tools.
- Enabling innovation around crypto-assets and technology-based offerings, developing digital currencies and improving payments systems.
- The need for firms to consider the end-customer, throughout the business and at all stages of a product lifecycle.
- Issues around data transfer constraints versus “open finance” initiatives, and about the ethical use of data.
- A focus on firms' technological resilience, with outsourcing, cybersecurity and management of IT risks being common themes.
- The need for firms to revisit their governance arrangements and controls, especially given that large-scale remote working will likely remain, and the use of technology to identify emerging and heightened risks.
- Regulators' own use of technology, to improve efficiency of processes and to be able to respond with greater speed and agility, will impact their supervisory approach.