The deputy governor of the Bank of Italy Fabio Panetta spoke about Fintech developement in the European Union. The definition of “Fintech” comes from the Financial Stability Board: Fintech refers to any “technologically enabled financial innovation that could result in new business models, applications, processes or products with an associated material effect on financial markets and institutions and the provision of financial services.
We observe at the same time Fintech start-ups gaining market shares in specific business lines thanks to aggressive pricing policies, many banks have either established strategic partnerships with them or have taken them over. This way, banks are integrating fintech services into their value chains in order to support their digital plans.
While Fintech start-ups are gaining market shares in specific business lines thanks to aggressive pricing policies, many banks have either established strategic partnerships with them or have taken them over. This way, banks are integrating fintech services into their value chains in order to support their digital plans.
Together with Fintech, it comes cyber risk, which can cause enormous damages. In 2017, the spread of two pieces of malicious
software called WannaCry and NotPetya led to losses in the hundreds of millions of dollars for their high-profile victims, which include the British National Health Service and shipping giant Moller-Maersk of Denmark.
First, it should guarantee a level playing field, in order to avoid regulatory arbitrage and distortions. Regulation should remain tech-neutral, treating the intermediaries that deliver the same services in the same way. Second, given the rapid change that will affect the fintech sector in the future as well, regulation and supervision should be flexible, in order to encourage innovative projects and to avoid any obstacles to the changes that are also likely to affect the supply of technology-intensive
services in the future. Third, a true level playing field would require financial sector authorities within each country – such as bank and insurance supervisors, market authorities, etc. – to cooperate with one another and with regulators in other fields such as data protection, cyber risk, and antitrust. But the spread of these new technologies and the availability of ever more comprehensive information on individuals raises broader and more fundamental questions.
Technology is creating the “technological unemployment” that had been foreseen by Keynes already and is one of the factors further exacerbating income and wealth inequality in both advanced countries and emerging market economies. It also raises the issue of how to guarantee confidentiality in relation to Big Data, how to use it within the limits imposed both by the rules and by the will of our citizens, whose right to privacy must in any case be upheld. We must better define both the legal and ethical limits on the use of Big Data: recent events in connection with Cambridge Analytica and Facebook have sounded the alarm.
