FCA Chief Nikhil Rathi Outlines Priorities for Regulating Big Tech and AI

The UK's Financial Conduct Authority (FCA) Chief Executive Nikhil Rathi delivered a speech  at the Digital Regulation Cooperation Forum (DRCF), outlining the FCA's priorities for regulating Big Tech firms operating in financial services.

Rathi emphasized that leading "a co-ordinated and effective effort to make the most of the opportunities of Big Tech - whilst mitigating the risks" will be a top priority for the DRCF going forward. He noted the rapid transformation happening, with 5 of the world's 6 largest companies now being tech giants like Apple, Microsoft, Alphabet, Amazon and Nvidia.

The FCA aims to promote innovation while protecting consumers from potential harms like data asymmetry. Rathi warned that if Big Tech gain too much data advantage, it "will reduce competition, leading to reduced innovation and worse outcomes for consumers."

To address this, the FCA plans to work with industry on developing use cases for sharing data from Big Tech to improve financial services and maintain a level playing field. The FCA will also partner with the Payment Systems Regulator to examine potential competition issues around digital wallets becoming dominant gateways for financial products.

Rathi announced the launch of the DRCF's new AI and Digital Hub, which will provide informal advice for tech innovators across financial services from four regulators - the FCA, CMA, ICO and Ofcom. He called this a "shopfront" to help firms get products safely to market.

The FCA will prioritize gaining clarity on how regulated firms are deploying AI strategies. Rathi highlighted the need for robust testing, validation and explainability of AI models. He revealed the FCA is investing in digital skills, opening a new data science hub in Leeds.

On data sharing, Rathi said the FCA is examining developing "a commercially viable framework for data sharing in Open Banking and Open Finance" to increase competition and innovation, while overcoming resistance from incumbents and Big Tech.

The speech signaled the FCA's focus on coordinating an effective, innovation-friendly approach to regulating the rapid implementation of Big Tech, AI and data capabilities across financial services.

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