Yesterday, the United Kingdom’s Prudential Regulatory Authority released a business plan dealing with a wide range of topics related to financial technology (Fintech) and the safety of the banking sector. In the report, the Bank of England talked about how banks could be more safe and secure in the current vibrant market.
According to the report, the banking sector in the United Kingdom is fully secured but that doesn’t mean it will remain the same in the future. To deal with future dangers of cyber thefts it is inevitable to make a future strategy. Additionally, it said that the resilience of the banking sector should not be taken for granted. PRA and firms are continuously working towards a future-centric approach where financial innovations and asset management are kept in the central theme. Time doesn’t remain the same as always, the United Kingdom is also preparing for the future. The priority will always be to provide a safe environment for the banking sector, says the PRA report.
The PRA’s “Business Plan” emphasizes future threats and their possible solutions. For smaller, domestically focused banks and building societies, the PRA is also creating the “Strong and Simple” regulatory framework, which is simpler but just as robust. On the issue of securitization, Her Majesty’s Treasury (HMT) prioritized regulation and its initial focus area Future Regulatory Framework (FRF).
The PRA looks at operational resilience in a comprehensive manner where firms and the financial sector need to learn, learn and respond against cyber threats. According to the reports, PRA aims to remain at the forefront of digitalization and risk faced by the PRA-regulated entities.
Additionally, it seeks to use technology in developing ways to attract and retain customers by reducing costs and increasing efficiencies. Here lowering costs and increasing efficiencies means promoting decentralized finances (DeFi) and blockchain use in peer-to-peer transactions. The PRA will keep track of businesses’ use of emerging technologies and asset tokenization. Similarly, the PRA is concerned about the possibility of capital and profit erosion for companies that adopt new technologies more slowly.
According to the reports, the PRA is working with domestic and international regulatory bodies to take a proactive approach within the financial sector. It will promote the Nobel use of technology in the future. Additionally, Prudential Regulatory Authority is a big promoter of discussions in the digitalization of the banking sector and insurance. Also, financial services and markets could change as a result of the rapid development of artificial intelligence (AI) and machine learning (ML). It will make the fintech sector more effective, accessible, and suited to individual customers’ needs.