Financial Literacy Month, which is coming to an end, has enabled us to confirm a profound change that is taking place at high speed. The digital transformation of financial services affects our lives, providing a multitude of benefits, but also raising several important issues.
At our fingertips, our phone becomes a portal open to the world that includes a host of financial services that we need: banking, securities brokerage, personal finance management, insurance, and j on the way… These services follow us wherever we are. They are personalized, available day and night and increasingly diversified.
Stakeholders in the Québec financial sector aim to maintain high standards of integrity and consumer protection. However, when they browse the web, they have access not only to the online services of stakeholders here, but also to those of several other providers established elsewhere in the world, some of which do not comply with these same standards, or are downright malicious.
The risks of the digital age
The monitoring activities that we conduct at the AMF have led us to take a greater interest in this vast choice of digital financial services available on the web, in the marketing practices used online, and in the influence of these practices and of the media social impact on consumer decision-making. Our findings are worrying.
First, digital technology is fertile ground for fraud: fraudsters take advantage of the anonymity of the web and privileged access to our daily lives, which they easily observe from our digital trace, this data both sensitive and revealing of our private life, which we simply leave behind when we browse the web.
Then, we observe, in particular on several online trading platforms, digital marketing techniques that aim to influence the decision-making of investors.
These techniques may lead them to take actions that are not necessarily in their interest, such as engaging in financial transactions that are incompatible with their investment objectives or their risk tolerance.
Finally, young consumers as well as those who invest independently and those who invest in crypto-assets are increasingly adopting social media as a source of information… or misinformation. Their financial decisions are thus increasingly dependent on “financial influencers”, individuals who claim to be seasoned investors and who generously share their “secrets” to make a fortune.
However, in most cases, these “finfluencers” do not have the real objective of adequately informing their audience, but rather of generating the greatest number of views or clicks, or of profiting financially from a buzz that they help to create for securities or cryptoassets, in which they themselves have invested.
Impacts of technologies on consumers
Two main findings emerge from the reflections that we made public on the sidelines of the 17e edition of our Rendez-vous avec l’Autorité, on November 22, in front of more than 400 stakeholders from the financial sector.
First, traditional financial literacy is no longer enough: consumers must also learn to use mobile applications safely, recognize online fraud, protect their personal information and consent to its sharing in an informed manner.
Next, consumer caution is of paramount importance today. The ever-increasing volume of information conveyed on the web and social media, the disintermediation of certain markets — such as that of cryptoassets — and the offer of digital financial services from companies established in countries or territories with a lax framework or non-existent constitute major challenges for all regulators, including the Authority.
Consumer vigilance is thus proving to be the first line of defense in the face of digital challenges and must therefore, more than ever, be superimposed on the efforts that we are deploying as a regulator, particularly in financial education and awareness.
I therefore invite all stakeholders in the Quebec financial sector to act with us, right now, to better equip Quebec consumers to deal with digital issues. Developing their vigilance reflexes is a profitable investment for the integrity of the financial sector of today and tomorrow.