The financial technology (fintech) industry can do more to help people struggling financially during the current cost of living crisis, but regulatory change is needed first.
With the cost of living set to rise further next month as energy bills rise by 20%, Innovate Finance is calling on the government to make regulatory changes around open banking, data payments and debt advice.
“Fintech plays a major role in the development of personal finance and consumer support. As more can be done to support the deployment of budgeting algorithms and affordability with more regulatory support, Innovate Finance presents a action plan calling for regulatory change in the UK to help consumers use fintech tools to get through the cost-of-living crisis,” the trade body said.
The CEO of Innovate Finance, Janine Hirt said that there is a lot that fintech companies can do to help people – especially in open banking, but if there is a change in regulation: “We are at a critical stage , that consumers are facing increasing pressures on their personal finances, and it is important that there is a rapid change in regulatory policy.”
Innovate Finance suggests that open banking rules be expanded to include a wider range of services, such as savings and loans. It says there should be caps on the fees banks charge to release customer data, and debt advice regulations should be changed to allow more robo-advisers, which provide free advice to consumers.
“At a time when consumers everywhere are struggling with the rising cost of living, fintechs have a key role to play in helping everyone navigate these challenging economic times. Currently, eight out of every 10 UK adults are regularly using fintech tools, and we can increase consumer use and value by bringing corporates as well.”
The current financial struggles of people around the world can encourage the adoption of apps, just as the Covid-19 pandemic did but for different reasons.
For example, recent research from cloud-based card processing platform Marqeta, which looked at how much consumers are struggling due to high inflation and a sluggish economy, found that people looking for more credit options and trying to better manage their finances.
In its survey of more than 4,000 people, including 1,000 in the UK, Marqeta found that more consumers are turning to credit to cope with rising living costs, with 57% of those surveyed using credit cards to can spend. last year.
Separately, Innovate Finance responded to the second anniversary of the publication of the government’s Kalifa Review of UK fintech.
The review commissioned by the Treasury into the UK’s future in financial technology, by WorldPay chairperson Ron Kalifa, said in February 2021 that the government must urgently introduce effective policies in five key areas as the industry in fintech has reached a major crossroads. He makes recommendations on skills, industrial expansion in the country, investment, foreign trade, as well as policy and regulation.
Innovate Finance said as the co-secretariat of the Kalifa Review, it was happy to see the good progress made in two years, but it added: “It is critical now to continue building this momentum. We see good progress -regulatory development that looks to provide digital infrastructures for the future.
But it warned that technology and markets are developing faster than ever and regulators need to keep up with the change: “There are now different regulators that play mainly to create a framework for digital assets and a sound data economy.This will be challenging as we seek to create a consistent vision that will accelerate program delivery and ensure UK fintech competitiveness.
“We need to ensure that incumbents and heritage players in the UK are truly open to fully embracing open banking and the introduction of central bank digital currencies as opportunities to add value to their consumers – there is more progress to be made on this front. and we look forward to working with the entire ecosystem to help drive this.”