Artificial Intelligence, Sustainability, and Regulation: The Main Challenges for the Financial Sector

These issues “do not only affect the financial sector, they are structural transformations of the economic system.”

Artificial intelligence, sustainability, and regulation. These are the main challenges facing the financial sector, according to an assessment made by representatives from different areas during the celebration of the IV Observatorio de las Finanzas organized by EL ESPAÑOL – Invertia.

During the panel on the future of the financial sector, Mónica Melle, advisor to the Chamber of Accounts of the Community of Madrid; Antonio Romero, corporate director of Associative Services and Resources of CECA; Ángel Martínez-Aldama, president of Inverco; and Arturo González Mac Dowell, president of the Spanish Fintech and Insurtech Association, participated.

According to Melle, the technological challenge “transforms everything.” The advisor to the Chamber of Accounts has focused on cybersecurity, a challenge that companies in the sector must face to “provide security to clients and users” regarding the services they offer. It is about “a change in the value chain that technology represents.”

In Melle’s view, “fintech has changed everything.” This raises new risks that will need to be regulated. Among them, she highlighted artificial intelligence as “an important challenge for the sector.”

Regarding artificial intelligence, Melle stressed the importance of financing companies that develop this technology, “let’s not develop a new bubble.”

From AI to Sustainability

Another challenge for the financial sector, in addition to digitalization and artificial intelligence, is sustainability. “Climate change and all environmental risks are present,” Melle indicated.

According to Antonio Romero, the challenges posed by “digitalization and sustainability do not only affect the financial sector, they are structural transformations of the economic system.” “The banking sector must seek its role in these transformations,” he added.

Romero indicated that digitalization represents a “transversal transformation of the financial system.” In the case of sustainability, the corporate director of Associative Services and Resources of CECA emphasized “the transformations required within the financial system itself.”

In his opinion, the role of the financial sector is “to support the productive sector to decarbonize its processes and evolve towards a less energy-intensive economy.” He believes that “the sector is in an ideal position to do so.”

Regulation

In his intervention, Torres also emphasized the importance of having a regulatory framework “that provides security” to adequately develop “or face these challenges.” Furthermore, he warned about the importance of ensuring that “no group is left behind.”

Martínez-Aldama added that “it is essential for this regulation to be consistent and provide the financial system with the capacity to carry out its work.” In his opinion, the primary challenge for the sector “is to finance the economy.”

With the public sector’s financial capacity restricted by the path of deficit and debt reduction, the president of Inverco highlighted the importance of public-private collaboration. “We need 300 billion euros annually to change the productive method of our companies,” he stressed.

For Arturo González Mac Dowell, “the issue of sustainability” concerns him less. He believes that the financial sector in general, excluding bitcoin mining, likely has one of the least negative impacts on the environment.

Thus, he emphasized that the main challenges of the sector are, in reverse order, “the changing and increasingly polarized user,” technology, and regulation.

González has argued that the “unstoppable regulatory change” should be halted. “In the United Kingdom, they have done it to take a retrospective approach,” he pointed out.

“There are many mouths to feed in Brussels that never stop generating regulation. On Mondays, those on the right say that regulation should go in one direction, and on Tuesdays, those on the left say it must go in the other,” he noted.