IMF chief sounds alarm on ‘big data disruption’

International Monetary Fund (IMF) managing director Christine Lagarde speaks at a G20 high-level seminar on financial innovation entitled “Our Future in the Digital Age” on the sidelines of the G20 finance ministers and central bank governors meeting in Fukuoka on June 8, 2019. (AFP / POOL / Kiyoshi Ota)
Updated 09 June 2019

IMF chief sounds alarm on ‘big data disruption’

  • Fintech poses significant threat to global financial system, says Lagarde
  • Lagarde said China presents an example of the trade-off between benefits and challenges posed by financial technology

FUKUOKA, Japan: International Monetary Fund Managing Director Christine Lagarde warned on Saturday that the increasing presence of technology giants using big data and artificial intelligence could cause  significant disruption to the world’s financial system.

The rapid development of financial technology (fintech) has increased access to cheap payment and settlement systems for low-income households in emerging countries where traditional banking networks are scarce.

But it has raised concern about the increasing dominance of big technology firms in mobile payments, which could force global policymakers to rethink the way they regulate the banking system and ensure financial settlements are executed safely.

“A significant disruption to the financial landscape is likely to come from the big tech firms, who will use their enormous customer bases and deep pockets to offer financial products based on big data and artificial intelligence,” Lagarde told a symposium on financial technology held on the sidelines of the G20 finance leaders’ meeting in Fukuoka, southern Japan.

While such innovation may help modernize financial markets, they could make the financial system vulnerable such as by putting payment and settlement systems under the control of a handful of technology giants, she added.

“This presents a unique systemic challenge to financial stability and efficiency, and one I hope we can touch on during the G20, and address in a cooperative and consistent fashion.”

Lagarde said China presents an example of the trade-off between benefits and challenges posed by financial technology.

“Over the last five years, technology growth in China has been extremely successful and allowed millions of new entrants to benefit from access to financial products and the creation of high-quality jobs,” she said. “However, it has also led to two firms controlling more than 90 percent of the mobile payments market.”

Addressing the pros and cons of financial innovation is among topics of debate at the two-day meeting of Group of 20 finance ministers and central bank heads that began on Saturday. 

Lloyd’s of London profits quadruple on investment gains

Updated 18 September 2019

Lloyd’s of London profits quadruple on investment gains

  • Specialist insurer reports first-half pre-tax profit of $2.87 billion

LONDON: The 330-year old specialist insurance market Lloyd's of London reported a first-half pre-tax profit of 2.3 billion pounds ($2.87 billion) on Thursday, up nearly fourfold on investment gains and a cutback in underperforming business.
Lloyd's, which covers commercial risks from oil risks to footballers' legs, suffered steep losses in 2017 and 2018 due to natural catastrophes such as hurricanes, typhoons and wildfires.
Lloyd's last year told its 99 member syndicates to ditch the worst performing 10% of their businesses.
"It is encouraging that the Lloyd's market is showing increased discipline in 2019," Chief Executive John Neal said in a statement.
"We need to make some brave choices on how to meet the expectations of our customers and all our stakeholders in the future."
The market has proposed its members move to electronic exchanges next year, as it responds to competition from cheaper rivals.
Further details of the strategic changes will be released on Sept 30.
Net investment income rose to 2.3 billion pounds from 0.2 billion a year earlier, helped by strong equity returns.
Gross written premiums rose 1.7% to 19.7 billion pounds but the company's combined ratio, a measure of underwriting performance in which a level below 100% indicates a profit, weakened to 98.8% from 95.5%.
The results compare with a profit of 0.6 billion pounds a year ago.
Premium rates rose by an average of 3.9%, Lloyd's said.
Lloyd's in May asked the Banking Standards Board to conduct a survey of the insurance market's 45,000 participants on issues such as honesty and respect to help to improve its working environment, following allegations of sexual harassment at member firms.
The survey will be published on Sept 24, Neal said on Thursday.