The Financial Conduct Authority (FCA) and the Bank of England have outlined proposals for a data-focused future for the UK financial services sector.

The strategy outlines an increased focus on using advanced analytics and automation techniques to gain a better understanding of how each market functions. The FCA hopes this will improve the way the organisation predicts, monitors and responds to firm and market issues.

Data science units will be established in selected parts of the FCA, utilising new investments from the regulator to better understand data and innovative technology.

The Bank of England also published a discussion paper Transforming data collection from the UK financial sector, to improve the timeliness and effectiveness of data collection from firms across the financial industry.

The paper sets out the issues facing the current data collection system and identifies and explores a series of potential solutions, prompting feedback from the industry.

“Advances in technology are changing the nature of the firms and markets we regulate,” said Christopher Woolard, executive director of strategy and competition at the FCA. “Our data strategy provides a clear path for us to ensure we have the necessary skills and processes in place to remain at the forefront of this change.

“In keeping with our mission, a data-driven approach to regulation allows us to anticipate harms before they crystallise, better understand the effect on consumers of changing business models and to regulate an increasing number of firms efficiently and effectively.”

Sam Woods, deputy governor for prudential regulation and the chief executive of the Prudential Regulation Authority, added: “Having the right data is vital to our role as a regulator, and to the ability of banks and insurers to manage themselves effectively. Recent developments in technology should allow us to improve how we collect data from firms, making reporting more timely, more effective and less burdensome for firms.

“This is potentially a major change so we want to work closely with firms to make sure we get it right over the next decade – our Discussion Paper starts that process by setting out the strategic issues in order to stimulate a debate about the way forward.”