Fintech and the Digital Transformation of Financial Services : Implications for Market Structure and Public Policy

This note examines the implications of digital innovation for market structure and attendant policies, including financial and competition regulation. There have been several surveys of regulatory responses. This note takes a step back, to look at...

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Main Author:	World Bank
Format:	Technical Note
Language:	English
Published:	Washington, DC 2022
Subjects:	FINANCIAL SERVICES FINANCIAL SECTOR INNOVATION DIGITAL FINANCIAL INNOVATION FINANCIAL INTERMEDIARIES DIGITAL FINANCIAL MARKET FINANCIAL SERVICES COMPANIES FINANCIAL SECTOR ICT FINANCIAL SERVICES MARKET FINANCIAL SECTOR COMPETITION REGULATION
Online Access:	http://documents.worldbank.org/curated/en/099735304212236910/P17300608cded602c0a6190f4b8caaa97a1 http://hdl.handle.net/10986/37340

id	okr-10986-37340
recordtype	oai_dc
spelling	okr-10986-373402022-05-21T05:10:37Z Fintech and the Digital Transformation of Financial Services : Implications for Market Structure and Public Policy World Bank FINANCIAL SERVICES FINANCIAL SECTOR INNOVATION DIGITAL FINANCIAL INNOVATION FINANCIAL INTERMEDIARIES DIGITAL FINANCIAL MARKET FINANCIAL SERVICES COMPANIES FINANCIAL SECTOR ICT FINANCIAL SERVICES MARKET FINANCIAL SECTOR COMPETITION REGULATION This note examines the implications of digital innovation for market structure and attendant policies, including financial and competition regulation. There have been several surveys of regulatory responses. This note takes a step back, to look at what the economic theory of banking and financial intermediation can tell us about how technology may drive industrial organization in the sector, and how that might inform further policy responses. The paper roots the impact of the digital transformation of finance in innovations that have enabled providers to address long-standing challenges of financial intermediation, including asymmetric information, uncertainty, incomplete markets, and fixed and variable costs of production. The paper describes how digital innovation affects these key economic frictions in finance and alters the financial services value chain and industrial organization. The forces driving these changes, and potential outcomes in terms of industry structure, lead to insights for policy makers on how to harness the benefits of fintech, while mitigating some of the risks, particularly around competition and market structure. The focus is on economic and technological forces that apply broadly across financial services. It recognizes that the sector encompasses a wide range of different products and services and is composed of numerous sub-markets that might use different technologies or have different economic structures. These may thus diverge in market structure and competition outcomes. 2022-04-26T20:51:20Z 2022-04-26T20:51:20Z 2022 Technical Note http://documents.worldbank.org/curated/en/099735304212236910/P17300608cded602c0a6190f4b8caaa97a1 http://hdl.handle.net/10986/37340 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank Washington, DC Report Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	FINANCIAL SERVICES FINANCIAL SECTOR INNOVATION DIGITAL FINANCIAL INNOVATION FINANCIAL INTERMEDIARIES DIGITAL FINANCIAL MARKET FINANCIAL SERVICES COMPANIES FINANCIAL SECTOR ICT FINANCIAL SERVICES MARKET FINANCIAL SECTOR COMPETITION REGULATION
spellingShingle	FINANCIAL SERVICES FINANCIAL SECTOR INNOVATION DIGITAL FINANCIAL INNOVATION FINANCIAL INTERMEDIARIES DIGITAL FINANCIAL MARKET FINANCIAL SERVICES COMPANIES FINANCIAL SECTOR ICT FINANCIAL SERVICES MARKET FINANCIAL SECTOR COMPETITION REGULATION World Bank Fintech and the Digital Transformation of Financial Services : Implications for Market Structure and Public Policy
description	This note examines the implications of digital innovation for market structure and attendant policies, including financial and competition regulation. There have been several surveys of regulatory responses. This note takes a step back, to look at what the economic theory of banking and financial intermediation can tell us about how technology may drive industrial organization in the sector, and how that might inform further policy responses. The paper roots the impact of the digital transformation of finance in innovations that have enabled providers to address long-standing challenges of financial intermediation, including asymmetric information, uncertainty, incomplete markets, and fixed and variable costs of production. The paper describes how digital innovation affects these key economic frictions in finance and alters the financial services value chain and industrial organization. The forces driving these changes, and potential outcomes in terms of industry structure, lead to insights for policy makers on how to harness the benefits of fintech, while mitigating some of the risks, particularly around competition and market structure. The focus is on economic and technological forces that apply broadly across financial services. It recognizes that the sector encompasses a wide range of different products and services and is composed of numerous sub-markets that might use different technologies or have different economic structures. These may thus diverge in market structure and competition outcomes.
format	Technical Note
author	World Bank
author_facet	World Bank
author_sort	World Bank
title	Fintech and the Digital Transformation of Financial Services : Implications for Market Structure and Public Policy
title_short	Fintech and the Digital Transformation of Financial Services : Implications for Market Structure and Public Policy
title_full	Fintech and the Digital Transformation of Financial Services : Implications for Market Structure and Public Policy
title_fullStr	Fintech and the Digital Transformation of Financial Services : Implications for Market Structure and Public Policy
title_full_unstemmed	Fintech and the Digital Transformation of Financial Services : Implications for Market Structure and Public Policy
title_sort	fintech and the digital transformation of financial services : implications for market structure and public policy
publisher	Washington, DC
publishDate	2022
url	http://documents.worldbank.org/curated/en/099735304212236910/P17300608cded602c0a6190f4b8caaa97a1 http://hdl.handle.net/10986/37340
_version_	1764486982405193728

Fintech and the Digital Transformation of Financial Services : Implications for Market Structure and Public Policy

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