Swiss Re tech chief: Fintech can 'improve business models’

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Fintech's existence nowadays is simple: it can help financial institutions improve their business models.

Speaking in Beijing on Sunday, this was the view of Dr. Luca Marighetti of global reinsurer Swiss Re, as he spoke about the development of technology in finance.

Marighetti, Swiss Re's head of tech transformation, was addressing the 2018 Tsinghua PBCSF Global Financial Forum, a two-day event held by the PBC School of Finance at Tsinghua University.

“In the finance industry, whether it is a bank or an insurance company, we do a lot of work electronically. This means that we have lots of technology use. Through digitalization of credit products, we can significantly improve productivity while mitigating risks.”

Fintech can also ensure a level playing field by ensuring fairness for end customers and providers and preventing inappropriate discrimination, Marighetti emphasized, adding that Europe is now highly concerned about customer data privacy and security, an issue which can be well balanced through fintech.

Luca Marighetti, head of tech transformation at Swiss Re, speaks at the 2018 Tsinghua PBCSF Global Financial Forum on Sunday, May 20, 2018. /Photo provided by Tsinghua PBCSF

With regard to how regulators should approach the issue of fintech and security, Marighetti pointed out that the solution first and foremost depends on the regulatory culture of varied jurisdictional systems.

Marighetti argued that there are basically two approaches being used by regulators to treat the development of fintech.

One is pragmatism, usually adopted by countries of Anglo-American common law systems, which focuses mainly on how this technology can be used to benefit more people.

The other is the approach called the law of absolute correctness, or deontology, which is a concept adopted in many European countries, such as Germany.

Deontological theories base morality on certain duties, or obligations, and claim that certain actions are intrinsically right or wrong, regardless of the consequences that may follow from those actions.

What makes a choice or an action right is its conformity within a moral norm. Thus, an agent has a duty to act in accordance with a moral norm, irrespective of the (potentially beneficial) effects of acting otherwise.

Therefore, when it comes to fintech regulation, the two schools of thought are split on maximizing the benefits for as many people as possible, or applying a stricter, rules-based approach which would arguably prioritize security over profit.

In addition, Marighetti noted that one of the most challenging tasks faced by regulators is the collusion between businesses and special interest groups when they conspire to stifle competition.