IIF Authors

Status: Will be live at 02/14/2023 11:00

FRT Episode 130: Digital Economy Dynamics


Data is at the core of today’s economy and the future of finance, so the stakes are high as governments create the frameworks to regulate and control its use.  This episode will share some of the different vectors where the IIF sees the new developments in the policy debate as well as the key takeaways on data governance from the 2022 IIF-EY Machine Learning Survey and recent staff papers on the impact of data frameworks.   

The episode highlights three areas: 

Rethinking the Regulation of BigTech. Scale drives value in data, and BigTech firms are positioned to develop and deploy data-driven applications such as AI tools and insight models. The role and regulation of BigTech in financial services has been a policy puzzle for years with debate to-date settling into an activity-based approach. We look at a recent speech by Bank for International Settlements General Manager Agustin Carstens “Big techs in finance: forging a new regulatory path” on February 8th that outlined an evolution of regulatory thinking on these points with more focus on a combination of entity, activity, and outcome considerations. 

AI/ML as Critical Tools for the Future of Finance. Artificial intelligence and machine learning are increasingly a topic of conversation in the C-suite, including how to best shape ethical and appropriate governance mechanisms. The 2022 IIF-EY Machine Learning Survey found the industry increasing adoption of these new technology tools and putting them into production environments.  Questions of data management and model risk governance are important points for regulatory engagement, but the industry has well-tested practices to manage these risks and much to share with other sectors as society grapples with ethical use of this new technology.    

Case Examples of the Impact of Data Policy on Digital Economic Cooperation. Advocates for restrictive data policy frequently intone that the costs would only be borne by big banks, BigTech, and other large intermediaries; however, IIF staff papers have outlined how the costs, lost opportunities, and denuded services are broad-based and felt by sectors including SMEs. As a new G7 Presidency launches, the IIF is publishing a set of case examples that share how restrictive data policy impacts end users in fraud prevention, AML/RegTech, and travel insurance examples.