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Chartered Insurance Institute
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Disruptive Influences: Technology, politics and change in the financial sector

'Disruptive Influences: Technology, politics and change in the financial sector' looks at the new risks emerging from this new wave of digital change and what challenges this offers for public policy regulation and wider society.

Are we are on the verge of another industrial revolution? Cheap computing power and strides in machine learning make computers good enough to solve problems which only a few years ago could only be tackled by the human brain. This has the potential to turn the services sector upside down.

Over time computers will autonomously undertake complex tasks that would previously have been the preserve of highly trained professionals. A range of services from financial planning to medical diagnostics will be carried out by machines more cheaply and possibly far more effectively.

The benefits of this revolution will be huge. But it will also pose challenges for society. We will have to adjust to big changes in the labour market, rethink how ethical and legal norms apply to decisions made by computers, and protect ourselves for threats to our privacy and security. Politicians and regulators will have to work out how to manage the social conflicts that will inevitably arise as existing ways of doing things are upended.

The financial services sector is a crucible for many of these developments. The automation of clerical, back office and customer services operations is already underway. Online platforms are nibbling at the lending and capital raising traditionally performed by banks. The investment industry wonders how computers might provide advice to customers deciding what to do with their portfolios. The insurance industry is considering how big data could help underwrite risks. The sector overall, as a custodian of wealth and personal data, must consider how this is protected from cyber criminals who want to steal it. Meanwhile regulators must consider whether emergent technologies might threaten the stability or security of the financial system broadly.

This report looks thematically at the implications of technology for different aspects of the financial sector from regulation to cyber security. They are:

• Section One - Implications for politics and regulation

• Section Two - Implications for consumers and the public interest

• Section Three - Emerging risk challenges for the insurance sector

• Section Four - Technological and geopolitical risks

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