Digital Finance

The digitalisation of the financial sector continues.

 

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Welcome to KPMG's dedicated page for updates on the regulation of emerging technology use in financial services.

The financial services sector has seen a rapid acceleration in the use of emerging technology and digitisation. As a result, many regulators are navigating how to best ensure the regulatory framework manages the risks of these innovations without destroying their potential to significantly enhance the financial system.

Artificial intelligence and machine learning techniques are being incorporated into firms' processes and are increasingly being used in tools designed for use by customers. Regulators are taking note of ethical concerns where AI models insufficiently consider data cleaning, transformation and anonymisation and where the widespread use of AI models could impact financial stability and/or market integrity

As firms lean on outsourcing to minimise costs and deliver innovative products, there is growing scrutiny on cyber resilience and third-party outsourcing.

Market interest around crypto-assets, and the underlying distributed ledger technology (DLT), continues to grow. The potential benefits of these innovations — to increase payment efficiency, reduce cost and expand financial inclusion — have been widely acknowledged. Regulatory frameworks are now being rolled out to manage the risks. At the same time, central banks continue to develop their initiatives around central bank digital currencies (CBDCs).

In a shift away from traditional business models, big tech players are beginning to offer a variety of platform-based financial services. While the consequent network effects can lead to efficiency gains and lower user costs, they can also be leveraged for anticompetitive activities.

Fundamental building blocks underpinning all emerging technologies and digitisation are infrastructure and data. Firms need to ensure they have the expertise to store and analyse their databases and have in place adequate governance and controls. They need to protect confidential customer and market data, while delivering services more efficiently across borders. This raises legal challenges, which regulators continue to debate.

KPMG firms have a wealth of experience across financial services, offering deal advisory, tax, legal and regulatory compliance insight and helping to implement transformational, technology and organisational change. When launching new innovative products and services, this experience can help clients adapt to changing regulatory requirements, identify and manage emerging risks.

Related articles and publications

Final rules on UK critical third parties

BoE/PRA/FCA final rules – creating a more operationally resilient financial services sector

The UK Digital Securities Sandbox is open

Exploring the regulatory barriers to emerging technology adoption

Decoding the EU Artificial Intelligence Act

Understanding the AI Act’s impact and how you can respond.

No-one playing in the sandbox

Regulators struggle to drum up interest in the DLTR and DSS

Systemic or non-systemic...that is the question

A comparison of the UK’s proposed stablecoin regimes

Open Finance in the EU and UK

Proposals to harness the potential

The EU AI Act gets a green light: deal-readiness and compliance roadmap

How will the EU AI Act regulate business and how can you prepare now?

Next steps for UK stablecoin regulation

HMT, PRA and FCA publish their proposals

Crypto regulatory round up

Regulators fine-tune upcoming frameworks

Diverging regulatory approaches for AI

Implications for financial services firms

The future of the euro

The EC publishes its draft legal framework for a potential European CBDC

Further UK crack down on crypto promotions

The FCA publishes 'near final' rules to take effect from October

The end of fin-fluencing

Regulators are cracking down on crypto promotions

A UK regulatory regime for cryptoassets

Same risk, same regulatory outcome

To CBDC or not to CBDC

The much-anticipated consultation on a digital pound is now live

No custody without CASS?

Application of CASS rules to cryptoasset custody

Managing critical third parties

Progress towards finalising regulatory frameworks

DeFi and the decentralisation illusion

There are questions around ‘decentralisation’ and ‘democratisation’ claims.

Stable (or not-so-stable) coins

The increasing call for their regulation.

DLT: The future is distributed

Distributed ledger technology.

KPMG Regulatory Barometer - H2 2024

Insights for the changing world

European Regulatory Radar

The outlook for financial services regulation.

UK Regulatory Radar - Insights and implications

List of UK regulatory round-ups providing insights on where the agenda is heading and implications for firms.

Our people

Kate Dawson

Wholesale Conduct & Capital Markets, EMA FS Regulatory Insight Centre

KPMG in the UK

Bronwyn Allan

Manager, Regulatory Insight Center

KPMG-UK


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