Financial Stability Implications from Fintech: Supervisory and Regulatory Issues That Merit Authorities’ Attention

Technology-enabled innovation in financial services (fintech) is developing rapidly. With its emergence, there will be both opportunities and risks to financial stability that policymakers, regulators, supervisors and overseers should consider. This is particularly important as many innovations have not yet been tested through a full financial cycle, and decisions taken in this early stage may set important precedents. 

To draw out the supervisory and regulatory issues of fintech, the Financial Stability Board (FSB) developed a framework that defines the scope of fintech activities and identifies the potential benefits and risks to financial stability. It provides a basis on which future analysis and monitoring can be made. As most fintech activities are currently small compared to the overall financial system, the analysis focuses on conceivable benefits and risks. Nonetheless, international bodies and national authorities should consider taking fintech into account in their existing risk assessments and regulatory frameworks in light of its rapid evolution. Indeed, many authorities have already made regulatory changes to adapt to fintech activities.