UK markets watchdog says 'synthetic data' can aid choice, innovation

FCA signage is seen at its head office in London
Signage for the Financial Conduct Authority (FCA), the Britain's financial regulatory body, is seen at its head office in London, Britain, March 10, 2022. REUTERS/Toby Melville/

LONDON, Feb 9 (Reuters) - Britain's financial watchdog said on Thursday it will push ahead with plans to make available "synthetic data" to help increase innovation and choice in financial services following a consultation last year.

Synthetic data refers to customer data that has been stripped of some information or encrypted to preserve privacy, making it easier to share between companies, such as fintechs, that want to offer competing financial services.

Data privacy laws make it harder for third-party companies to access data on customers held by long-established banks and insurers.

The Financial Conduct Authority (FCA) last year published a consultation paper on synthetic data.

Respondents said it would be useful as a supplement to efforts to combat financial crime, and for environmental, social and governance (ESG) purposes.

"Based on the feedback to the Call for Input and previous research, our current position is that synthetic data can potentially make a significant contribution to beneficial innovation in UK financial markets," the FCA said in a statement on Thursday.

It will host a joint industry-academic roundtable in the coming weeks in partnership with the Alan Turing Institute and the Information Commissioner’s Office (ICO) to understand the challenges of validating synthetic data.

"We will continue to engage loosely with the ICO to explore opportunities for data sharing in financial services within he bounds of UK data protection regulation," the FCA said.

Reporting by Huw Jones; editing by Barbara Lewis

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