Digital Transformation in UK's Financial Services: Balancing Innovation and Regulation
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Abstract
This study examined the digital transformation of the UK's financial services sector, focusing on the delicate balance between innovation and regulation. Through a comprehensive desktop review of academic literature, industry reports, and regulatory documents, the research explored the impact of emerging technologies, evolving business models, and regulatory approaches on the financial landscape. The study found that while digital technologies such as artificial intelligence, blockchain, and cloud computing were driving significant innovations in products and services, they also presented challenges in cybersecurity, data privacy, and financial inclusion. The UK's regulatory approach, including initiatives like the regulatory sandbox, demonstrated promise in fostering innovation while maintaining necessary safeguards. However, the rapid pace of technological change continued to challenge existing regulatory frameworks. The research also highlighted the broader societal implications of digital transformation, emphasizing the need for a holistic approach that addresses technological, organizational, regulatory, and ethical dimensions. The study concluded by offering recommendations for financial institutions, regulators, and policymakers to navigate the complex dynamics of digital transformation, fostering innovation while ensuring stability, security, and inclusivity in the evolving digital finance ecosystem.
Key words: Digital Transformation, Financial Services, Innovation & Regulation
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References
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