Exploring Risks and Issues Related to Policy Making and Regulation in FinTech
Exploring Risks and Issues Related to Policy Making and Regulation in FinTech

Summary/Abstract: This paper aims to highlight the role of FinTech in today's modern financial industry. FinTechs are often concentrated in specific activities for which they try to offer a comparative (and competitive) advantage in terms of quality or price, which is achieved through two main ways: (a) by improving the efficiency of companies through cost reduction and productivity enhancement and thus increasing profitability; and (b) by improving the quality of financial services and products offered to consumers. Then, the paper attempts to lay out and address potential risks related to: the financial institutions, consumers or customers and investors, and the pro-cyclicality and systemic risk in the markets. This requires the interaction and intervention of policy makers and regulators. Therefore, the assessment of FinTech's benefits and risks ended up with recommendations for policy makers and regulators aimed at supporting innovation in the field of finance, while ensuring that the use of FinTechs is consistent with promoting financial stability, competition and market integrity, and guaranteeing the protection of consumers and financial investors. The paper concludes that in order to keep up on these changes while upholding high standards for security, stability and consumer protection, more agile and proportional forms of regulation must be established through closer cooperation among public authorities. Given the changing financial sector, the new technology will be a lever of innovation for regulatory authorities, too.

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