The FCA explains that consumer interactions and engagement with financial products and services build digital footprints, generating ever-increasing amounts of data that can reveal much about our identity and behaviours. The FCA recognises that it is vital that this data is protected and that consumers’ right to privacy is safeguarded.

Simultaneously, however, the FCA acknowledges that this data can also drive valuable innovation, enabling automation, improving decision-making and risk management, and personalising services. This has the potential to deliver greater market efficiency and integrity, financial inclusion, and the prevention of financial crime.

The FCA also says that artificial intelligence (AI) holds significant potential in the financial services industry. However, the extent of its potential will depend on the wide availability and accessibility of data to innovators who will build the next generation of products and services. While recognising that financial data is highly sensitive and subject to critical data privacy laws, the FCA also acknowledges that challenges associated with access to financial data, especially for new market entrants, can inhibit the development of new products and services in the market.

The FCA is therefore interested in solutions that will enable greater data sharing for the purposes of competition, without undermining data protection laws that are in place to protect consumers.

The FCA explains that “synthetic” data is a privacy preserving technique that could open up more opportunities for data sharing by generating statistically realistic but “artificial” data that is readily accessible. Synthetic data is already used across other sectors, such as robotics and autonomous vehicles, and there is an early but growing level of exploration within financial services.

Accordingly, the FCA has launched a Call For Input in order to conduct an introductory exploration of market attitudes towards synthetic data, and its potential for opening data sharing between firms, regulators and other public bodies. The FCA wants to understand industry views on the potential for synthetic data to support innovation and the requirements to be effective, as well as potential limitations and risks. The deadline for responses to the Call for Input is 22 June 2022. To access the Call for Input, click here.