On Wednesday, March 31, 2021 the Ethics in the Age of Digital Finance: Issues and Challenges event was held online, which was organised jointly by the Observatoire de la Finance (Geneva) and the Hoffmann Global Institute for Business and Society (INSEAD). From online banking to contactless payments and cryptocurrencies, financial technology – or FinTech – is rapidly impacting the financial services industry and those who must supervise and use it. The webinar presented an invaluable opportunity to engage in a meaningful discussion on how new technologies impact financial services and what the ethical opportunities and challenges are by the digitisation of finance. It also introduced the audience to the global Prize “Ethics & Trust in Finance for a Sustainable Future” that was initiated in 2006 by the Observatoire de la Finance. The Risk & Compliance Platform Europe also took part in this online event and covered it via its website. This is part one in a series of three articles on this webinar.
There were several speakers that gave presentations and took part in the panel discussion, including leading experts representing viewpoints from academia and industry, as well as previous winners of the global Prize. They were:
- Stephane Bernard (Euroclear)
- Professor Paul Dembinski (Observatoire de la Finance & Uni Fribourg)
- Dr. Katell Le Goulven (INSEAD)
- Josina Kamerling (CFA Institute)
- Dr. Marta Rocchi (Dublin City University, previous Prize winner)
- Brett Scott (author, previous Prize winner)
- Professor Peter Zemsky (INSEAD)
Responsible business and finance as an attention point between businesses and society
One of the speakers at this event was Professor of Strategy at INSEAD, Peter Zemsky. He kicked off the webinar by discussing the two biggest macro trends hitting businesses and society. He stated that on the one hand, accelerated by the pandemic, is the digitalisation and the data transformation of business and society. At the same time, there is an increasing awareness and urgency to pay attention to the practice of responsible business where decisions are made, taking into account not just financial returns, but also the broader impact on people and the planet.
He said that what excited him in particular about a topic such as this is that it is looking at the intersection of these two trends. All of these digital and technology tools are giving even more power for impact to business leaders, so there’s potential to address fundamental issues of social progress and to address sustainability and planetary issues, but that there is also even more of an ability to make a mess, as he stated.
Professor Zemsky continued by stating that finance would have to be one of the industries, if not the industry, that is maybe the most pressing here. First of all, finance has a hugely vibrant ecosystem today. He explained that a lot of the leading technologies, whether that be artificial intelligence (AI) or blockchain, have great uses here. You not only have fintechs or big tech players, but many traditional players as well that have gotten technologically savvy. He also stated that at the same time, finance has traditionally been an attention point between businesses and society. There is a reason why, through bitter lessons, that finance has come to be so heavily regulated. There is a lot of issues with moral hazard, and the complexity makes the market mechanism difficult at times.
The real challenge with technology – regulation cannot keep up with change
Professor Zemsky stated that when people are given money and in two or three years are able to obtain more money, it leads to an immense value creation. Yet when people don’t have access to that mechanism and can’t get financial services, they are really frozen out of economic livelihood. He said that when the whole system breaks down with systemic issues, ‘we all hurt, and hurt bad’.
He believes that the real challenge with all of this technology is that it is just not possible for regulation to keep up with the change. So, this is why, as he stated, we absolutely have a critical need for the ethical practice of finance in these incredibly charged turbo markets. Finally, he stressed that this is for the integrity of the whole system that brings prosperity to humanity across the planet.