Financial Intermediation and Technology: What’s Old, What’s New?

Luc Laeven, Arnoud Boot, Peter Hoffmann and Lev Ratnovski ()

No 15004, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study the effects of technological change on financial intermediation, distinguishing between innovations in information (data collection and processing) and communication (relationships and distribution). Both follow historic trends towards an increased use of hard information and less in-person interaction, which are accelerating rapidly. We point to more recent innovations, such as the combination of data abundance and artificial intelligence, and the rise of digital platforms. We argue that in particular the rise of new communication channels can lead to the vertical and horizontal disintegration of the traditional bank business model. Specialized providers of financial services can chip away activities that do not rely on access to balance sheets, while platforms can interject themselves between banks and customers. We discuss limitations to these challenges, and the resulting policy implications.

Keywords: Financial intermediation; Financial innovation; Fintech; Information; Communication (search for similar items in EconPapers)
JEL-codes: E58 G20 G21 O33 (search for similar items in EconPapers)
Date: 2020-07
New Economics Papers: this item is included in nep-big, nep-mac and nep-pay
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Citations: View citations in EconPapers (2)

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