Fintech and Financial Services: Initial Considerations

Dong He, Ross Leckow, V. Haksar, Tommaso Mancini-Griffoli, Nigel Jenkinson, Mikari Kashima, Tanai Khiaonarong, Celine Rochon and Hervé Tourpe

No 2017/005, IMF Staff Discussion Notes from International Monetary Fund

Abstract: A new wave of technological innovations, often called “fintech,” is accelerating change in the financial sector. What impact might fintech have on financial services, and how should regulation respond? This paper sets out an economic framework for thinking through the channels by which fintech might provide solutions that respond to consumer needs for trust, security, privacy, and better services, change the competitive landscape, and affect regulation. It combines a broad discussion of trends across financial services with a focus on cross-border payments and especially the impact of distributed ledger technology. Overall, the paper finds that boundaries among different types of service providers are blurring; barriers to entry are changing; and improvements in cross-border payments are likely. It argues that regulatory authorities need to balance carefully efficiency and stability trade-offs in the face of rapid changes, and ensure that trust is maintained in an evolving financial system. It also highlights the importance of international cooperation.

Keywords: SDN; cross-border payment; transaction costs; Fintech firm; payment pattern; payments chain; Fintech; cross-border payments; financial sector; market structure; financial regulation; financial stability; monetary policy; central banks; international cooperation; virtual currencies; digital currencies; competition; entry; intermediaries; concentration; market contestability; vertical integration; horizontal integration; product differentiation; network externalities; economies of scale; barriers to entry; sunk costs; fixed costs; information asymmetries; matching; innovation; adoption; payment instruction; fiat money; Emerging technologies; Blockchain and DLT; Global (search for similar items in EconPapers)
Pages: 49
Date: 2017-06-19
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Citations: View citations in EconPapers (38)

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