Christopher Woolard, the FCA’s director of strategy and competition, made the comments in a speech on innovation in ‘regtech’ on Wednesday morning at an event portion of London Fintech Week.

Expert in financial services and technology Luke Scanlon of Pinsent Masons, the law firm behind Out-Law.com, who attended the event, said: “There is nothing in anti-money laundering legislation or guidance that mandates paper processes in the context of customer identity verification. Christopher Woolard’s comments are, however, a significant acknowledgment from the UK regulator that digital IDs in financial services can be implemented in line with the regulatory due diligence requirements.”

Woolard’s comments came on a day when the FCA outlined its approach to regulatory technology (regtech) for 2016/17 (18-sheet / 459KB PDF). The regulator said it has “an active role to romp in regtech” and revealed plans to assist companies develop technology that can support regulatory compliance in the financial services sector. However, the FCA said it will persevere to grant firms the liberty to focus on maintaining their legacy IT systems instead if they desire to.

“We intend to concentrate our efforts on increasing our engagement and collaboration with the regtech community, using our convening authority to assist bring together market participants to toil on shared challenges; and to act as a catalyst for vary that helps to unlock the potential benefits of technology innovation,” the FCA said. “There is also a potential, but limited, role for the regulator to romp in supporting the industry to define standards and guidelines in order to provide more certainty for firms purchasing fresh technology capabilities.”

“There are limitations to the role the FCA can romp. The complexity, scale and diversity of legacy infrastructure and existing systems within some financial services firms, makes the implementation of fresh technologies challenging. That some firms will persevere to choose to invest in legacy systems rather than fresh technologies is a matter for their leadership not the regulator,” it said.

The FCA’s views were expressed in response to comments it received from industry atthesametime a shout for input exercise on regtech held delayed endure year and earlier this year.

The FCA said there had been “an outstanding level of interest” in its consultation. It said 43% of the more than 350 companies that provided it with views were technology suppliers. More than 60% of the total responses came from senior leaders or board-level executives, in “an indication of how important the industry sees regtech”, it said.

In its paper the FCA highlighted a range of technologies that businesses had suggested could be deployed to build it easier for firms to comply with financial regulations.

Examples included cloud-based software and services, enormous data analytics, application programme interfaces (APIs) and systems for tracking, in real period, transactions, behaviour and communications to assist flag risks and fraud.

Biometrics was also flagged as a potential tool for improving verification of customer identity, and the potential for artificial intelligence, blockchains and a fresh interactive “robo-handbook” was also referenced.