Fintech and the Future of Finance (eBook)

Fintech-the application of digital technology to financial services-is reshaping thefuture of finance. Digital technologies are revolutionizing payments, lending, investment,insurance, and other financial products and services-and the COVID-19 pandemic hasaccelerated this process. Digitalization of financial services and money is helping tobridge gaps in access to financial services for households and firms and is promotingeconomic development. Improved access to basic financial services translates intobetter firm productivity and growth for micro and small businesses, as well as higherincomes and resilience to improve the lives of the poor. Technology can lowertransaction costs by overcoming geographical access barriers; increasing the speed,security, and transparency of transactions; and allowing for more tailored financialservices that better serve consumers, including the poor. Women can especially benefit.Yet too many people and firms still lack access to essential financial services that couldhelp them thrive. It is time for policy makers to embrace fintech opportunities andimplement policies that enable and encourage safe financial innovation and adoption.Fintech and the Future of Finance: Market and Policy Implications explores theimplications of fintech and the digital transformation of financial services for marketoutcomes, on the one hand, and regulation and supervision, on the other hand-andhow these interact. The report, which provides a high-level perspective for seniorpolicy makers, is accompanied by notes that focus on salient issues for a moretechnical audience. As the financial sector continues to transform itself, policytrade-offs will evolve, and regulators will need to ensure that market outcomesremain aligned with core policy objectives. Several policy implications emerge.1.Manage risks, while fostering beneficial innovation and competition.2.Broaden monitoring horizons and reassess regulatory perimeters.3.Review regulatory, supervisory, and oversight frameworks.4.Be mindful of evolving policy trade-offs as fintech adoption deepens.5.Monitor market structure and conduct to maintain competition.6.Modernize and open financial infrastructures.7.Ensure public money remains fit for the digital world.8.Pursue strong cross-border coordination and sharing of informationand best practices.