The Impact of Technology on the Financial Services Industry

Arindam Bandopadhyaya and Jinglin Yang

Chapter 21 in Handbook of Global Financial Markets:Transformations, Dependence, and Risk Spillovers, 2019, pp 551-570 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Technological changes have had an impact on every traditional industry, including financial services. Brick and mortar banks are no longer the face of this industry. New technological inventions, such as bitcoin-inspired distributed system, Open Application Program Interface (API), and crowd-sourced identity schemes have shaped the industry into something faster, safer, and cost-efficient. In this chapter, we explore the influence of technology on the financial service industry. We first investigate the impact of technology on existing market elements like retail investors, commercial banking, traditional exchanges, and the emergence of exchange traded funds. We examine high-frequency trading and the link between technology flash crashes. We also investigate how technology has influenced the profession of equity research. We then document new inventions like Open APIs and Blockchains and discuss how such innovations have and are likely to change the business landscape in the financial services industry.

Keywords: Market Integration; Risk Management; Risk Assessment; Financial Uncertainty; Volatility; Financial Markets; Financial Development; Country Risks; Sovereign Debt Markets (search for similar items in EconPapers)
JEL-codes: F37 (search for similar items in EconPapers)
Date: 2019
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