'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
• Section Three - Emerging risk challenges for the insurance
• Section Four - Technological and geopolitical risks
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