Impact of FinTech innovation on the financial sector’s stability

Abstract

The rapid growth of financial technology (FinTech) has raised concerns about its potential impact on the financial sector’s stability. The dissertation examines the impact of FinTech innovation on the financial sector’s stability by analysing the trends and patterns of FinTech innovation, assessing the impact of FinTech on traditional financial services, and exploring the potential risks and benefits of FinTech for financial stability. Using a comprehensive database of global FinTech innovation activity, this dissertation analyses the trends and patterns of FinTech innovation across different regions and countries. The analysis reveals that the United States, China, Singapore and the United Kingdom are the leading global FinTech centres, with the highest levels of FinTech investment, innovation, and adoption. However, other regions and countries, such as Europe, Asia, and Latin America, are also emerging as important FinTech centres with significant potential for growth and innovation. The dissertation also examines the impact of FinTech on traditional financial services, including banking, insurance, and asset management. The analysis shows that FinTech is disrupting traditional financial services by introducing new business models, products, and services and by enhancing competition, efficiency, and customer experience. However, FinTech also poses challenges for traditional financial services, regulation, cybersecurity and customer privacy. Furthermore, the dissertation explores the potential risks and benefits of FinTech for financial stability. The analysis shows that FinTech can contribute to financial stability by enhancing competition, innovation, and efficiency and by expanding financial inclusion and access. However, FinTech can also pose risks to financial stability, such as concentration risk, contagion risk, and market fragmentation. The dissertation concludes by providing policy recommendations for promoting FinTech innovation while ensuring financial stability. These recommendations include establishing a regulatory framework that balances innovation and stability, promoting cooperation and information sharing among stakeholders, enhancing cybersecurity and risk management practices, and ensuring consumer protection and privacy. In summary, the dissertation provides a comprehensive analysis of the impact of FinTech innovation on the financial sector’s stability, highlighting the trends and patterns of global FinTech centres, the impact of FinTech on traditional financial services, and potential risks and benefits of FinTech for financial stability. The dissertation contributes to the growing literature on FinTech innovation and provides insights for financial policymakers, regulators and market participants.