You are looking at 1 - 1 of 1 items

  • Author or Editor: Jeffrey M. Amico x
Clear All Modify Search
You do not have access to this content

Edward F. Greene, Jeffrey M. Amico and Surya Bala

The financial sector appears to be on the verge of a significant transformation. Traditional market participants such as banks, investment advisors and institutional investors are beginning to face disruptive pressure from a wide array of advances in financial technology, or ‘fin tech’. New forms of competition have emerged, seeking to address perceived inefficiencies in various core business lines of the financial system, including lending money, raising capital and transmitting money between individuals. As this transformation plays out, regulators will need to adapt existing regulatory structures or create new ones to keep up. In particular, they must find the proper balance between protecting consumers from abuse while also allowing these new technologies to modernize and improve financial markets. This chapter focuses on three of these recent developments in closer detail: marketplace lending, crowdfunding and blockchain technology. While the applications differ, all three rely on a common model: eliminating the role of traditional intermediaries and thus enabling market participants to connect and transact with each other directly. This form of ‘dis-intermediation’ promises speed and efficiency, as processes like approving loan applications, raising capital and transferring money can now take mere seconds (or less) instead of days or weeks. At the same time, it also creates risk for consumers, as highly regulated entities such as banks stand to be replaced by software applications and peer-topeer networks that largely sit outside of existing regulatory frameworks. Regulators must carefully develop policies that maximize the benefits of these technologies for consumers while mitigating their costs.