The FinTech Opportunity

BIS Working Papers No 655
August 2017

This paper assesses the potential impact of FinTech on the finance industry. I document first that financial services remain surprisingly expensive, which explains the emergence of new entrants. I then argue that the current regulatory approach is subject to significant political economy and coordination costs, and therefore unlikely to deliver much structural change. FinTech can improve both financial stability and access to services, but this requires significant changes in the focus of regulations.

JEL classification: E2, G2, N2

Keywords: FinTech, financial innovation, regulation, rents