I discussed the benefits of fintech in previous blogs, such as reduced costs and increased efficiency in financial transactions. Today, I will share some interesting opinions on risks associated with fintech.
Mark Carney, governor of Bank of England, stated in a conference that fintech would pose risks to the stability of bank funding, credit quality and even the broader economy. However, I found his statement not convincing. Carney did not give any concrete examples of risks posed by fintech, but his only reasoning is that fintech can increase cyber risk and that history has plenty of examples where financial innovations led to early boom but eventually busted. In my opinion, many fintech, such as Block Chain, could actually decrease the risks of fraud and increase transaction security.
On the other hand, I am with Carney on the point governments should assess existing rules for fintech and adjust policies accordingly to ensure that fintech develop in a direction that maximizes opportunities but reduces risks. Admittedly, some fintech can facilitate money laundering and terrorism financing if not governed properly. For example, Alipay, a Chinese fintech that allowed unlimited free money transfer, was put on a cap of CNY 20,000 by the government for anti-money-laundering.
Source: http://www.businessinsider.com/mark-carney-on-fintech-and-systematic-risk-2017-1