Innovation, AI & the future of financial regulation

Speech by Jessica Rusu, FCA Chief Data, Information and Intelligence Officer, at the Innovate Finance Global Summit.

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Speaker: Jessica Rusu, Chief Data, Information and Intelligence Officer 
Event: Innovate Finance Global Summit 
Delivered: 17 April 2023 
Note: This is a drafted speech and may differ from the delivered version 


  • our new Digital Sandbox will support innovative businesses and start-ups in developing new proofs of concept for products and services
  • we’re making it easier for firms to engage with our Innovation Services by providing a single point of entry
  • we’re continuing our successful TechSprint programme with a look at Financial Services Register data, and a global TechSprint looking at greenwashing will help us tackle a global challenge

The future of regulation rests with Innovation and AI

In the past few months we’ve seen several significant market events, from the collapse of FTX, Silicon Valley Bank and Credit Suisse, to several significant moments in Tech, with the release of ChatGPT, the clamp down on TikTok, and most recently the UK government White Paper on Artificial Intelligence.

The use of data and tech continues to transform financial services.

We’re transforming too – we're working intensely to leverage data and innovation to protect consumers, enable growth, and transform our operations.

I wanted to address a few questions I am frequently asked about:

  1. reducing firm burden – what we are doing to make it easier for regulated entities to compete and grow in the UK market
  2. interoperability – what we are doing to align with other domestic and global regulators
  3. data – what we are doing to exploit the masses of data we collect as well as publicly available data sources

As a tech leader, I am convinced more than ever before, that the answers to these questions rest with innovation, AI, and digitally enabled regulation.

True transformational change

When I took this role nearly 2 years ago, FCA Innovation was already a globally recognised leader in this space. 

The number of global regulators that come to visit me in Stratford to understand how we’re leading in this space hasn’t slowed down, and we are not resting on our laurels.

In the past 2 years, we have completely refreshed our Innovation programme, doubling the volume of TechSprints, introducing PolicySprints – such as the Crypto and Open Finance PolicySprints – as well as launching a completely new Innovation Pathways service.

These initiatives combine collaboration, technical expertise, diversity of participants, and innovative methods – such as synthetic data- to answer complex technical & policy questions quickly.

Last year at this event I announced the APP Fraud TechSprint. I’m pleased to report that the ground-breaking use of synthetic data in the identification of methods to detect this kind of fraud resulted in 40% of SME participants either launching their product, securing partnerships or funding, and several SMEs were nominated for industry awards.  

We have seen many successful new firm entrants with Innovation Pathways, supported by our tailored regulatory guidance.

Successful graduates of these programmes are off-ramped into our Early and High Growth Oversight function, and many of these newly regulated entities are delivering positive consumer outcomes throughout the financial services market.

Our Innovation Services are not just about growth. We are also working to help consumers with cost-of-living increases. Our upcoming work with Fair4All Finance and industry practitioners will focus on sustainable and affordable credit providers.

We’re also turning the TechSprint model inwards, on ourselves. At the end of March we ran a fully internal social media TechSprint, and within 2 weeks we built 10 proofs of concept models for the identification of online sludge practises, FinProm scams, greenwashing and more.

An all-new Digital Sandbox

This year, at Innovate Finance Global Summit 2023, I’m pleased to announce the creation of a permanent Digital Sandbox service.

What’s in the Digital Sandbox:

  • synthetic transaction and market data, such as that used in the Push Payment Fraud TechSprint, combined with over 200 data assets
  • payments & transactions data, investment data, Company House data, consumer data including credit data, Covid data, and much more
  • we are also crowd-sourcing data, enabling an Open ‘API marketplace’ giving access to other FinTech datasets, with over 1,000 APIs already on-boarded
  • a solutions development, prototyping and test environment
  • direct access to academics, government bodies, venture capitalists and charities

From summer 2023, our Digital Sandbox will expand to support a broader range of innovators. It will be available even for applicants outside of, or after, specific TechSprint activities. 

We benefit from supporting this innovation by promoting solutions to complex regulatory challenges like APP Fraud, Greenwashing, and scam detection. 

Our Digital Front Door

One of the primary reasons we invest in technology and innovation is to better support the firms we regulate, and our digital transformation programmes are centred on driving efficiencies, better outcomes, and reducing regulatory burden for firms. Let me give you 2 examples.

First, by simplifying the regulatory journey. If you don’t know how to engage with Innovation Services, we’ve made it simple by providing a single point of entry through our new Digital Front Door, designed to create a seamless firm experience. Simply tell us a few things about what you want to achieve, and we’ll triage and ensure you receive the right innovation service. To support this we’ve introduced a number of digital tools, including decision trees, and an FAQ digital assistant to match firms with the most appropriate service for their needs, and provide additional guidance to help answer any further questions.

Secondly, our vision for the Digital Front Door work will continue and goes much further, including numerous Technology & Data initiatives, such as digitising forms at the Gateway, building firm portals within RegData, revamping our website, and evolving our data processing power to simplify the way firms submit data to us.

UX continues to be a major focus of our work and based on user feedback we’ve streamlined our Sandbox and Innovation Pathways application forms to provide a more user-friendly journey.

We’ve also held several significant Transforming Data Collections events – this is a joint initiative with the Bank of England focused on reducing firm regulatory burden. 

This initiative is already delivering results. In January we launched intuitive form design for Consumer Credit forms, submitted annually by over 20,000 firms, so they’re now easier to use, more helpful and includes validations to support high quality submissions. We’ve also introduced predictive analytics, to reduce late firm submissions, helping firms submit data on time, and reducing late fees for firms.

GFIN Collaboration & Greenwashing TechSprint

Coming to the point about interoperability - our work goes beyond domestic applications and includes extensive collaboration with international counterparts.

The Global Financial Innovation Network, (GFIN) was launched in 2019 by a group of 23 regulators, committed to helping innovative firms find more efficient ways to interact with regulators across borders. Since then, GFIN has grown to over 80 international organisations.

In 2021, GFIN identified 3 key areas of focus. These were Environmental Social & Governance (ESG), Artificial Intelligence, and Crypto.

In line with these commitments, I’m pleased to announce that we will be hosting a world first global TechSprint with our GFIN partners, in support of tackling greenwashing.

So on 17 April 2023 we are officially open for applications for the GFIN Greenwashing TechSprint, a 3 month long global event bringing together technology experts, firms, and an international group of regulators, to address issues related to greenwashing. 

We’re laser focused on this topic because as the demand for ESG-related products and services continues to grow, so does the risk of firms potentially overstating their sustainability credentials to attract customers and investors.

We want to ensure that consumers have access to genuinely ‘green’ or sustainable financial products and services.

This virtual TechSprint will run on our Digital Sandbox, leveraging our synthetic data testing platform at scale and it’s currently the only regulatory platform to host synthetic datasets for product development.

We’re now inviting participants so if any of you are interested in collaborating with us on this, please find out more here

Our Register Data TechSprint

The rate of consumer investment scams hasn’t slowed down. We have done a lot to promote our ScamSmart campaign, and to encourage consumers to check our Financial Services Register to ensure that a firm or investment they are considering is legit.

More simply, the FS Register is a list which includes roughly 50,000 firms. If a firm or activity isn’t on it, it's unregulated. In May 2023, we’ll be hosting a TechSprint focusing on the FS Register.

The ambition for this TechSprint is to explore innovative ways that Register Data  can be harnessed by third parties, such as comparison websites, to enable more consumers to access and use this information proactively ahead of making investment decisions. 

We are also looking at tech solutions to minimise the ‘Halo effect’, which happens when a firm that is authorised engages in unregulated activities, and these tactics make authorised firms or investment activities seem more trustworthy than they really are. 

More details on how to apply will be up on our website soon.

Our continued work on AI

In addition to providing Innovation firm support, TechSprints, and supporting international regulatory collaboration, we’re continuing to progress our work in Artificial Intelligence.

We've carried out extensive work to understand AI and consider its regulatory implications, as well as utilising AI methods to identify bad actors. 

The Government’s recently published AI White Paper includes feedback from industry, outlining a sectoral and pro-innovation approach.

We’re currently collaborating with the DRCF (Digital Regulation Cooperation Forum) and working through what the appropriate framework for AI in financial services could look like, considering feedback received from the AI Discussion Paper, the machine learning survey, as well as our extensive engagement in the AI Public Private forum, conducted jointly with the Bank of England.

In many ways AI sits at the core of Innovation and underpins many new and transformed business models. The opportunities for AI are enormous, particularly when combined with Quantum computing. But the risks require careful consideration, including Data Bias, Model Risk, as well as Outcomes-based monitoring implications.

The use of synthetic data and other Privacy Enhancing Technologies (PETs) provides a useful way to perform data mining and build advanced models whilst protecting sensitive information.

I’d like to thank our newly created Synthetic Data Expert advisory group who have been tasked with helping us create a framework for collaboration across industry, regulators, academia and wider society on synthetic data.

The Big Data Challenge

Our strategy to become a data-led regulator is centred on making better use of data to spot and stop harm faster. This is essentially about exploiting data to deliver connected intelligence.  

We have a Big Data challenge, and are continuing to optimise how we collect, store, and exploit this data. 

  • we’ve seen a 200% rise in the volume of data we process for investigations, including through encrypted channels such as WhatsApp 
  • we process over 1 billion of transactions every month in Market Oversight
  • enforcement teams sift through millions of legal records
  • we process Reg returns for over 53,000 firms throughout the year, with approximately 600,000 records submitted in 2022
  • we supplement this with publicly available information, for example from Companies House, or insights driven from social media, as well as more specific data that we collect directly from firms or that is shared through our regulatory partners, such as the PRA, Financial Ombudsman Service or Citizens Advice
  • we’ve improved our capability to spot harm through utilising web scraping techniques and scan approximately 100,000 websites every day  
  • our data pipelines provide daily updates into the FCA Data Lake and deliver 100,000 record updates per day

As we become a more proactive, forward-looking regulator, the need to continue to invest in our people, technology, intelligence and innovation services is underpinned by a successful data strategy

The innovative future of financial regulation

Finally, returning to our focus on financial innovation, I will leave you with a few thoughts. 

Never before have we seen so clearly the convergence in Finance, Tech, Innovation, and AI as we have seen these past few months. Advances in technology, changes in consumer behaviour, and macro shifts in market stability mean that regulators must keep pace with these changes, fighting fire with fire.

With the rapid changes in technology and recent game-changing innovations such as ChatGPT, we know we can’t rest. We need to keep up the pace. Now, more than ever, firms need us as regulators to embrace innovation and lead from the front.

Our Data, Technology, and Innovation teams are playing a vital role in keeping our dynamic financial services industry safe and adaptive to the future of finance, ensuring the UK maintains its position as a preeminent financial centre. 

Increasing international competitiveness and growth is about creating the right conditions for firms to innovate and to invest, leading to a productive, open economy that can compete with other economies for growth opportunities.

So my final announcement to you is our commitment to keep protecting consumers, to keep collaborating with a diverse set of stakeholders, to keep supporting firms, and to keep providing an environment to enable innovation, competitiveness and growth in an increasingly global, tech-driven and, most of all, exciting market.