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Financial intermediation and technology: What’s old, what’s new?

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

No 2438, Working Paper Series from European Central Bank

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. JEL Classification: G20, G21, E58, O33

Keywords: communication; financial innovation; financial intermediation; fintech; information (search for similar items in EconPapers)
Date: 2020-07
New Economics Papers: this item is included in nep-ban, nep-big, nep-fdg, nep-fmk, nep-ict, nep-ino and nep-pay
Note: 1137913
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Working Paper: Financial Intermediation and Technology: What's Old, What's New? (2020) Downloads
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