Alex LaPlante, managing director of research, and Charlotte Watson, research analyst, Global Risk Institute, are authors of a research paper called The Great Fintech Debate: Risks and Rewards of Financial Innovation.
We have entered a new era of innovation where advancements in computer processing and data storage have opened the doors to cutting-edge analytic techniques and better service. The financial-services sector, in particular, has seen a significant uptake in innovative solutions such as digital banking, robo-advisers, artificial intelligence and blockchain, to name a few.
The advent of these financial technologies and the companies that provide them (fintechs) present numerous opportunities for all financial sector participants and their customers, including increased efficiency, cost savings and tailored experiences. But, as we all know, there is no such thing as a free lunch. With these rewards come several risks that, if not properly identified, understood and managed, pose threats to consumers, financial institutions and the soundness of the financial system as a whole.
As Mark Carney, Governor of the Bank of England,…
