According to Williams: “Technology offers creative opportunities to improve the performance of the financial sector, and to remedy some of its shortcomings. FinTech’s spans products that address all parts of the so-called consumer wallet: planning, spending, saving, and borrowing”.
“The products are generally less complex, making them more understandable and easier for customers to use. They’re delivered via platforms that widen the overall customer base, allowing more people access to credit and the first rung of the financial ladder”.
For Williams, an obvious and potentially game-changing benefit is the ability to reach historically underserved and economically disadvantaged communities. He points out, however, that the flip side is that they could wind up becoming even more marginalized.
He also believes in the potential benefits of leveraging big data and data analytics to improve operational efficiency, risk management, and decision making. “Advanced data analytics could provide powerful tools to increase both the efficiency and efficacy of efforts to defeat money laundering and the funding of terrorist and criminal organizations. Left unbridled however, FinTech innovations such as digital currencies have the potential to make criminal and terrorist activity even easier”.
Williams is concerned for the resilience of the financial system as a whole, particularly as the FinTech industry continues to grow, both as nonbank institutions and via partnerships with banks.
“Moreover, for our financial system to be efficient, it’s important that we have a level playing field, regardless of how institutions prefer to describe themselves or what kind of charter they hold. As a matter of principle, if it walks like a duck and quacks like a duck, it should be regulated like a duck”.
In conclusion, Williams believes that well-designed regulation that protects consumers, fosters inclusionary practices, and enhances the fairness and resilience of the financial system should help FinTech’s contribution to creating a better financial system and economy.
The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions, position, or policy of Berkeley Research Group, LLC or its other employees and affiliates.