FCA Shares Progress on Synthetic Data Working Group as AI summit is underway in the UK

The Financial Conduct Authority (FCA) has issued updates on the progress of its Synthetic Data Expert Group (SDEG).

FCA established SGED in March 2023 to delve into the potential of synthetic data within the financial sector. The group comprises a diverse panel of 21 specialists from the financial sector, public agencies, data, and tech providers, as well as consumer groups.

The SGED group has held its initial four meetings from May to October 2023. FCA is presenting a progress report on the group’s achievements and seeking inputs on their ongoing efforts.

The group is scheduled to operate until November 2024, to deliver practical synthetic data insights for both practitioners and policymakers.

Report on using synthetic data in practice

The group is set to publish a report sharing real-life uses of synthetic data to help practitioners and policymakers. The report is poised to examine valuable insights and effective approaches through practical examples in key areas such as

Data augmentation and bias mitigation: Utilizing synthetic data to enhance the presence of underrepresented groups or instances in a dataset to diminish bias.

System testing and model validation: Applying synthetic data to verify that a system or model meets its designed objectives.

Data sharing (internal and external): The practice of distributing synthetic data to a range of users, such as those within a company, or to various organizations like third-party vendors and research institutions.

Members of the group will share their knowledge about methods for generating data, criteria for assessing its quality, and strategies for handling internal stakeholders when utilizing synthetic data.

The report will examine the application of synthetic data in diverse contexts, including fraud prevention, credit assessment, anti-money laundering efforts, and the implementation of open banking systems.

Also Read: FCA Approves Paypal’s Crypto-Related Services in the UK

Public-private sector collaborative framework

Worldwide, regulatory bodies are crafting methods to facilitate cooperation between the public and private sectors on data exchange and the use of Privacy Enhancing Technologies (PETs).

“We‘ll create a framework that enables organisations to collaborate on synthetic data use cases, for example by using our digital sandbox”,

the group said on wednesday.

The Digital Sandbox, experimental platform is under its initial phase of development by FCA and aimed to Concentrate on some of the high-priority use cases, like fraud detection.

About Synthetic data

Synthetic data is artificially generated information created by using algorithms and simulation techniques that replicates the statistical characteristics of authentic data without including any actual events  or personal information.

Data possesses the potential to drive substantial change within the financial services sector by boosting operational effectiveness, lowering compliance expenses, and enhancing results for consumers.

Synthetic data is often used for testing algorithms and system, in the mean time, synthetic data can also be exploited by cybercriminals for fraudulent activities, like executing synthetic identity fraud.

Acknowledging the significance of privacy, innovators are increasingly embracing Privacy-Enhancing Technologies (PETs) to leverage data insights while preserving consumers’ privacy rights.

Synthetic data can be used in PETs to ensure secure testing, model training, collaborative research, and data analytics without revealing real user information, ensuring privacy protection and compliance with data regulations.

FCA’s Timely Progress as UK’s AI Summit is Underway

FCA progress report on SDEG  has come in time when AI summit in UK is underway.  The UK has just hosted two days summit on AI under government of PM Rishi Sunak to bring foreign political leaders, prominent figures from the tech industry, academics, and other key stakeholders to address growing concerns surrounding frontier AI. Earlier, while talking about summit Rishi Sunak emphasized on the global responsibility to comprehend and mitigate the risks associated with AI, meanwhile harnessing its benefits and opportunities for future generations​

The summit may serve as a platform for discussions and presentations related to artificial intelligence, including the use of synthetic data in finance sector. It offers a space for industry leaders, technology providers and regulatory bodies like FCA to collaborate and share insights.