The FCA's new Sector Views report sees technology as a key driver of change in the finance industry

• This story was delivered to Business Insider Intelligence Fintech Pro subscribers earlier this morning.
• To get this story plus others to your inbox each day, hours before they're published on Business Insider, click here.

The UK's Financial Conduct Authority (FCA) has released its annual Sector Views report, in which it assesses changes in financial services and the risks that can befall consumers as a result. The report identifies technology as one of the key drivers of change, and one that can enhance the efficiency and accessibility of financial services but also cause harm to consumers.

Of particular note are two key insights on Open Banking and fintech, and we think there are steps fintechs should take to ease concerns voiced by the FCA.

The country's financial watchdog is known for its fintech-friendly and innovative approach when it comes to regulating the industry, which is reflected in this report. However, it also shows that there are still a number of concerns when it comes to new entrants in the space.

Open Banking and PSD2 regulations are strengthening consumer data security, though not all new entrants are fully equipped with the proper data protections. Many banks and conventional financial institutions are working closely with emerging fintechs to implement Open Banking and PSD2 regulations, which aim to improve consumer data rights and online security as well as boost competition in the industry.

There are now 1 million UK consumers using open banking services, per the report. However, the regulator also stated that even under Open Banking, challenges for data sharing security remain, and while rules like Strong Customer Authentication (SCA) aim to improve security, there are still concerns about sharing data, especially with newer entrants that might not have the necessary data protection measures in place.

To ease the concerns of the FCA, fintechs should double down on security efforts when connecting with a wealth of consumer data via Open Banking APIs that could leave users vulnerable in the event of a cyberattack.

Fintechs and big tech companies are reshaping customer expectations, but they bring challenges in terms of regulation and oversight. The FCA states that these new entrants raise questions around liability and accountability, as well as the protection of consumers, who might not be aware of the regulatory protections - or lack thereof - that apply to financial products offered by startups.

To address this concern, new entrants should ensure that they educate consumers in a transparent way about whether and how their money is being protected.

Want to read more stories like this one? Here's how to get access:

1. Sign up for Fintech Pro, Business Insider Intelligence's expert product suite tailored for today's (and tomorrow's) decision-makers in the financial services industry, delivered to your inbox 6x a week. >> Get Started
2. Check to see if you already have access to Business Insider Intelligence through your company, or inquire about access if you don't. >> Check If You Have Enterprise Access
3. Explore related topics in more depth. >> Visit Our Report Store
4. Current subscribers can log in to read the briefing here.