The report provides an overview of the opportunities and risks with synthetic data, to contribute to beneficial and responsible innovation in financial services.
Synthetic data is one of many privacy enhancing technologies that can expand and support data sharing. While it has the potential to address important financial services public policy issues, such as financial crime and fraud, there are still open questions that are being researched.
Recognising the potential for this technology to drive societal good and foster a more inclusive and fair financial landscape, the FCA set up the Synthetic Data Expert Group (SDEG)[2] in March 2023. The group brings together 21 experts[3] from across financial services, public sector, data and technology vendors, and consumer groups to further explore the use of synthetic data in financial markets.
This report focuses on 3 key themes across the data lifecycle:
- data augmentation and bias mitigation system
- testing and model validation
- internal and external data sharing for fraud controls
These themes, illustrated through real-world use cases and the experiences of expert practitioners, provide unique insights into the opportunities and challenges that can arise from using synthetic data in financial services.
These insights will be of interest to industry participants including financial services, regulators and policymakers internationally. The key findings provide a helpful overview of the steps to consider when creating, using and sharing synthetic data, and the most relevant use cases across financial services.
Disclaimer
This report has been collectively authored by members of SDEG and colleagues across the FCA. It reflects the practical experiences members of the SDEG have encountered when generating or using synthetic data. It is designed to help regulators and industry practitioners better understand the opportunities and challenges of synthetic data.
The contents of this report do not represent the views of the FCA or any participating organisation. It does not endorse or condemn the use of synthetic data and does not imply compliance with UK data protection law.
This report and the applications, discussions and outputs of the Synthetic Data Expert Group should not be taken as an indication of recommendations, guidance or future policy.