The finance sector’s alignment with Big Tech through the adoption of platform business models, driven by extensive data acquisition and manipulation, is generating new societal risks, according to a report by the Finance Innovation Lab.
The report, titled "Lifting the Lid on Fintech," posits that fintech is fundamentally reshaping the finance landscape by revealing new data streams, business frameworks, and organizations that facilitate the speed and convenience of modern finance.
Fintech developments such as digital banking, contactless payments, and robo-advisory services have gained significant traction in the UK and globally. However, the report highlights that this technological evolution is amplifying existing threats to democracy, sustainability, equity, and resilience within the financial sector, while also introducing new concerns, particularly regarding data acquisition.
The report asserts, “We are witnessing unprecedented levels of corporate power and the emergence of institutions that are deemed too big to fail. There is a significant lack of transparency and accountability regarding the data collected from individuals. New business models are designed to predict and potentially influence behavior. Automation is perpetuating existing inequalities within essential services.”
To address these challenges, the lab puts forth several strategic recommendations for policymakers, including prioritizing social and environmental objectives in government decision-making, developing non-commercial alternatives to Big Tech that serve the public good, incentivizing fintech initiatives that focus on public interest, and enhancing regulations governing data collection.
Mick McAteer, founder of The Financial Inclusion Centre, comments: “Fintech is part of a long line of innovations touted as transformative. While there are undeniable advantages, this critical report delves beyond the initial excitement, revealing tangible and often overlooked threats posed by fintech and big data to consumers and society at large.
“The Lab’s comprehensive framework principles could guide policymakers and regulators in safeguarding citizens and communities from the more dystopian implications of fintech, while also fostering its socially beneficial aspects.”
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