He drew attention to the Tech Nation 2017 report charting the UKs digital landscape and providing analysis of Britain’s digital economy and clusters. The report paints a picture of a digital economy that is growing twice as fast as the wider economy and with an economic output close to £100bn per year. It includes a profile of several cities in the UK including Leeds, and the key role that major employers and universities in the cities play in the development of the sector. The growing sector in Leeds now employs almost 24,000 people and generates £688m.
So where’s the catch? Amongst a range of opportunities, Chris identified the tendency of the sector to grow through merger and acquisition without due consideration of the integration of the technological platforms that underpin their activity. He drew attention to a recent report by the Financial Conduct Authority that emphasised the development of technology that offers exciting potential to support the needs of consumers and the market whilst at the same time presenting new challenges and potential risks associated with how firms allocate responsibilities for systems shared among them. Distributed ledger technology (DLT) combines various existing tools such as shared databases, cryptography and peer-to-peer networking to offer firms the ability to share data efficiently and securely. Technology companies seeking to provide DLT-based solutions have grown sharply in number and size, and regulated firms have invested increasing resources in using this technology to provide financial services. It is a potentially disruptive technology with the ability to remove the need for certain intermediaries, to increase the speed of reconciliation and reduce costs.
However, like many new technologies, there are questions associated with its cost-effectiveness and its wider socio-economic implications that are yet to be fully understood. For example, DLT may offer some benefits which, while perhaps not unique, when combined with its other features, represent an improvement on other available technology. It might enable challenger firms to offer more robust financial services at a better price than current institutions which operate on less efficient legacy systems. Are firms able to assess operational risks associated with system-wide issues affecting multiple firms, and how will these be managed? What is the best way for DLT networks to protect themselves against attempts to break DLT network security? How might DLT be deployed to mitigate financial crime risks, and will regulated firms adopt such solutions?
Chris suggested that industry and regulators may turn to academics to address some of the complex questions associated with the introduction of new technologies. The lecture prompted personal reflection on the contribution we make at our own university and led me to consider four current initiatives. Firstly, our Cybercrime and Security Centre which aims to improve and incorporate an evidence-based approach into the frontline policing of digital forensics and cybercrime investigations, and to advance human factors of computer security, and forensics mechanisms and practice. Secondly, the Leeds Digital Hub delivered in partnership with the Yorkshire Post providing digital, creative and media businesses with a supportive environment and access to university expertise to support the growth of local businesses. Thirdly, the work of academics in Leeds Business School such as Jamie Morgan considering the philosophical foundations of Artificial Intelligence in a recent paper Yesterday’s tomorrow today: Turing, Searle and the contested significance of Artificial Intelligence. Fourthly, our partnership with the London Stock Exchange Group Academy to provide a series of masterclasses to exchange knowledge with leaders and managers working in the professional services sector in the North. Together these examples illustrate the academic enterprise and rigour that universities can bring to bear on developments in the Fintec sector.