The finance industry, because of blockchain, artificial intelligence, and smart contracts technology is undergoing a phase of disruption. The new structural changes and anticipated movement of customer preferences are discussed at global forums such as IMF, WEF, and OECD.The European Union is putting in place directives such as PSD2 & GDPR and opening doors for Open Banking. Certain industry leaders such as Mr. Chris Skinner and Mr. Brett King are proposing Virtual Banking. In India, Reserve Bank of India has already issued bank licenses to Indian companies. This may be the first step towards Virtual Banking in India. India is also ready with Payment and Settlement Bill, 2018 and Personal Data Protection Bill, 2018. Apart from banking, insurance, deposits, andlending, capital raising, investment management, andmarket provisioning would also see a disruption.
Simply put, the “trust gap” that blockchain would fill, prescriptive strategies that artificial intelligence would help businesses implement, predictive consulting that artificial intelligence would provide and enforceability gap that smart contracts could bridge, shall force business leaders to rethink their current business models.
So why does this inspire me to talk to you about FinTech? Perfect question. The Revolution is happening as 44 countries have already set up “Regulatory Sandbox” to understand the implication of these technologies on credit risks, liquidity risks and systemic risks that an economy faces. However, these technological disruptions would require regulators to understand whether old principles of risk mitigation and monetary policies would still apply or they would have to innovate new methods.
To understand the strategies for regulations or to put together a new business model, or to offer a unique customer experience; not only we should look at technologies, but also principles of monetary policy, present and proposed regulations, and financial risks mitigation principles.
Keep watching this space for more insights.