The Organization for Economic Cooperation and Development’s report, Technology and Pensions [1], was released in December 2017, providing an overview of how technology (FinTech) is being used to improve pension design and delivery and how regulators are managing these changes.
The report comes after a discussion on the challenges that regulators face to support FinTech from a roundtable held at the G20/OECD Task Force on Financial Consumer Protection meeting held in March of 2017.
The key findings of this report are:
- FinTech applications are increasing the accessibility of investing in pensions to a broader consumer base and making communications with pension savers more effective.
- FinTech is increasing the efficiency of the operation of pension schemes through risk management applications, the automation of investment processes and the facilitation of regulatory compliance.
- Governments are making substantial efforts to support the development of FinTech.
- Innovation Hubs are becoming a key component in regulatory support to help new businesses understand how existing regulation applies to their ideas.
- Regulatory sandboxes are emerging as a way to offer flexibility in how regulation applies for new business models and ideas.
- Effective engagement with all stakeholders will be a key factor in successfully supporting innovation in financial services.
- Engagement with international regulatory counterparts will be necessary to try to ensure a certain level of consistency in the regulations and their interpretation and application.
FinTech is one way technology can enhance interaction with pension members, as well as pull in under-served populations that would previously have little interaction with their pension carriers.
FinTech has the Potential to Increase Engagement
This OECD report analyzes the use of technology as a factor in increasing engagement through digital communications and how digital technologies are ‘likely to enhance the quality and effectiveness between pension providers and their members’.
It discusses pension dashboards throughout the world, as well as the impact of technology on internal processes, regulatory compliance, investment management, blockchain technology, as well as the overall impact of technology on business models.
It also identifies the risks associated with the greater use of technology and makes recommendations as to regulatory approaches to FinTech, while pointing to the challenges companies face when implementing successful programmes to support FinTech development.
The report is part of the OECD Going Digital project that provides policy makers with tools to help societies prosper in an increasingly data-driven and digital world.
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