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Group Head of Research, Public Policy and Institutional Relations of Santander
'Regulations should also be "future-proof" and adaptable to new technologies'
Bárbara Navarro, Group Head of Research, Public Policy and Institutional Relations of Santander
The global financial services industry has been under a steady but relentless digital revolution for more than a decade already.
The promise of increased efficiency and convenience during this process has been partially jeopardized by the implementation of many regulatory packages. This hasn’t been an exception to the European Union. Onwards and under this new political cycle that opens now, EU Regulators should revamp competitiveness and safety as the two flipsides of a coin – a delicate act that will imply a right balance of several themes at interplay:
Users' needs at the forefront of the regulation
At the heart of this challenge lies the evolving new user’s expectations and consumer habits. Today's consumers demand bespoke financial experiences, seamless access, and reinforced transparency. The solution to promote may be enabling the use of Big Data and Artificial Intelligence for the manufacturing of tailored financial products and the performance of risk assessments. Open Banking initiatives, where customers control their data, can further enhance competition and client choice and even provide the opportunity to monetize data under certain circumstances.
AI is a double-edged sword
New regulations must be clear to avoid hindering innovation but also address risks such as data protection and cybersecurity threats. Existing regulations already cover many areas, so new rules shouldn't overlap, creating increased complexity. This is crucial for Europe to be competitive in AI. It has the potential to revolutionize financial services, from fraud detection to personalized investment advice. The EU needs to develop Ethical Frameworks where regulations should address potential biases in AI algorithms and ensure fair treatment of clients. Clear guidelines are needed for responsible AI development and deployment, mitigating risks like algorithmic errors. Regulatory frameworks must ensure these technologies serve, not exploit, clients. All this to be done by permitting that AI developers can provide a top-notch capable AI to be delivered and implemented in the Block.
The financial industry sees opportunities and challenges
Regulations are overwhelming and costly. We advocate for simpler, phased-in approaches and a playing field where all providers, including FinTechs, are subject to the same rules. Regulations should also be "future-proof" and adaptable to new technologies.
The current regulatory landscape in the EU is still fragmented. This patchwork of national rules creates uncertainty for businesses operating across borders, hampering the development of a truly pan-European digital finance market. Moreover, one could argue that existing regulations were not designed for the digital age, more on the contrary are somehow endangering its development.