Financial Fictions in Synthetic Data Infrastructures

The advent and growing expansion of synthetic data across sectors and spaces generates opportunities to question how emerging socio-technical relations interact with established relations within algorithmic systems. ‘New infrastructural studies’ of finance inspired by Science and Technical Studies have productively shown how established relations between people and objects do not stand still but shift and change subtly over time. This paper examines the rapid integration of synthetic data in global financial governance since 2021 across three spaces and scales. First, are relations between state regulation and big finance in the example of the UK’s Financial Conduct Authority “Synthetic Data Expert Group” initiative. Second, are interactions between global regulation and financial technology (fintech) start-ups in the case of the Bank for International Settlements engagement with Iceland’s Lucinity, an AI software-as-service firm founded in 2018. Third is the status concerning how synthetic data is or is not being addressed in the context of some emerging financial markets and digital public infrastructures in Latin America as is PIX, the Brazilian central bank’s payment system. In tracing socio-technical relations bringing synthetic data into diverse spaces of global finance, our analysis points to underappreciated roles of narratives in shaping the functions, durability and openness of (financial) infrastructures. We specifically show how synthetic data developed for addressing long standing issues of money laundering, counter terrorism financing (ML/TF) and fraud detection enhance risks in two interrelated forms of spatial distancing: (i) are how techno-solutionist narratives increase the distance of financial regulators from increasingly complex objects of regulation; (ii) are how shifts from the domain of facts to fictions increase the distances between citizens and regulators in financial infrastructures; (iii) how the inclusion of synthetic data “solutions” obscure long standing challenges facing financial organisations and regulators in terms of access to capabilities and knowledge. Shedding light on the roles of narratives in the ‘synthesis of synthetic data’ into financial infrastructures, this paper points to possibilities for developing much-needed counter-fictions through democratic deliberation.