Speaking to “City Week 2020 – The 10th International Financial Services Forum”, Christopher Woolard, interim Chief Executive of the FCA posed 3 major questions:
- First of all, what lessons can we take from Covid-19 so far? In terms of society, technology and the manner in which we regulate?
- Second, how the FCA itself might change to meet some of these challenges, and what constants may remain?
- And third, given the backdrop of the UK’s exit from the EU, what’s the kind of regulation we need?
Covid-19
Starting with Covid, and this isn’t an original thought, the pandemic is bringing the future forward.
The economic impact of the measures taken to curb its spread – has (and will) speed up some of the long-term trends that are shaking up work, society and the financial system that underpins them all.
Whether that be the commercial retreat from the high street and the city centre, a lack of financial balance between the generations, fewer secure jobs and the impact of technological innovation.
Covid has accelerated consumer adoption of tech-enabled business models. It is not just Amazon that has experienced a significant increase in internet traffic, it is banking apps too.
Consumers’ and businesses’ retreat from cash has immediate implications for the bank branch and ATM network. But while the tech savvy benefit, a whole range of people, not just the older and poorer, risk being left behind.
During the Covid-crisis we have seen greater co-operation between us as the regulator and industry than I’ve ever known. That, coupled with the extraordinary public spiritedness of branch and call centre staff, helped ensure people could continue to receive in-person and phone banking, even as the rest of high street switched out the lights.
That co-operation must be the model for ensuring the digitally excluded do not become the cash excluded.
That will require both co-operation and public understanding. With net interest margins under real pressure, the challenge of how banks re-shape their business models to keep them profitable can’t be placed solely at the door of each individual, if we want a better outcome for society. Some things will need greater collective effort.
Covid has created other challenges for business models across financial services.
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