17 March 2018
visit www.nextgenbanking.co.uk

What are the financial stability implications from fintech?

27 June 2017  |  8613 views  |  0 World in hand

Fintech is still too small a chunk of the global financial system to present a compelling stability risk but the sector's fast-paced development means that international regulators should collaborate closely to guard against future risks, says a new report.

Put together by the international Financial Stability Board (FSB), the report identifies 10 fintech-related areas that "merit authorities' attention".

Three of these are priorities for international collaboration: managing operational risk from third-party service providers; mitigating cyber risks; and monitoring macrofinancial risks that could emerge as fintech activities increase.

The report identifies several benefits associated with fintech, including decentralisation and increased intermediation by non-financial entities; greater efficiency, transparency, competition and resilience of the financial system; and greater financial inclusion and economic growth.

But with these come potential risks, such as institution-specific micro-financial risks that could emerge and system-wide macro-financial risks, for instance increased connectedness and correlation risk.

The FSB argues that the private sector needs to improve data on fintech applications, and regulators must understand how businesses and the market structure are changing. In particular, international bodies and national authorities should take fintech into account in their risk assessments and regulatory frameworks.

Carolyn Wilkins, senior deputy governor, Bank of Canada and chair of the FSB’s Fintech Issues Group, says: "Regulators need to understand the impact that developments in fintech can have on financial stability, especially given the rapid rise of innovation in this space."

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Financial Stability Board weighs in on fintech credit markets

Financial Stability Board weighs in on fintech credit markets

23 May 2017  |  8665 views  |  0 comments | 5 tweets | 11 linkedin
Fintech firms do not threaten financial stability - FSB

Fintech firms do not threaten financial stability - FSB

04 November 2016  |  9685 views  |  0 comments | 20 tweets | 18 linkedin
Global regulators to probe fintech threats to financial stability

Global regulators to probe fintech threats to financial stability

29 February 2016  |  12788 views  |  2 comments | 32 tweets | 43 linkedin

Related blogs

Create a blog about this story (membership required)
Visit www.nextgenbanking.co.ukvisit www.ebaday.comVisit http://info.nice.com

Top topics

Most viewed Most shared
Augmentum Fintech raises £94m in IPOAugmentum Fintech raises £94m in IPO
11767 views comments | 25 tweets | 5 linkedin
Indian fintech sector needs regulatory support to flourishIndian fintech sector needs regulatory sup...
6793 views comments | 8 tweets | 7 linkedin
BIS warns central banks on digital currency issuanceBIS warns central banks on digital currenc...
6458 views comments | 18 tweets | 17 linkedin
Capital One virtual assistant can now issue virtual card numbersCapital One virtual assistant can now issu...
6218 views comments | 12 tweets | 11 linkedin
Starling and TrueLayer integrate for open bankingStarling and TrueLayer integrate for open...
6145 views comments | 13 tweets | 9 linkedin

Featured job

Competitive base + commission + benefits
UK or Germany

Find your next job