Fintech and Financial Services: Initial Considerations; SDN/17/05; June 19, 2017

From artificial intelligence to cryptography, “fintech” is accelerating change in the financial sector. This paper, prepared by an IMF staff team, sets out an economic framework to examine how fintech might impact the financial sector, from services to service providers. It suggests boundaries between different types of service providers are blurring, and barriers to entry are changing. These transformations, the paper argues, call for regulation to adapt to remain effective. It must balance efficiency and stability trade-offs, and ensure that trust in the financial system is maintained, ideally in an environment of international cooperation. The paper illustrates these broader considerations with a concrete discussion of the potential impact of distributed ledger technology on cross-border payments.