Finance and Technology: What is Changing and What is Not

45 Pages Posted: 3 Nov 2020

See all articles by Stephen G. Cecchetti

Stephen G. Cecchetti

Brandeis International Business School; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Kermit Schoenholtz

New York University (NYU) - Leonard N. Stern School of Business

Date Written: October 1, 2020

Abstract

Technology has long had a profound impact on financial services. Today, it is changing the range of services offered, as well as their delivery, cost, and accessibility. Yet, despite the explosion of small firms applying new technologies, very few of these new fintech companies have a broad influence on financial activity. Even in some sectors with significant entry, unit costs of financial intermediation remain stubbornly high. At the same time, there are notable fintech successes, especially in the provision of payments and credit in China. Going forward, the impact of fintech is likely to be greatest where existing suppliers lack competitive incentives or sophistication. Over the next decade, the decisions of regulators will have a profound influence on the array of financial services available, on how they are delivered and to whom. In the advanced economies, regulators generally support greater fintech competition, favoring lower costs and improved access. Furthermore, as Big Tech firms and large incumbent financial institutions vie for dominance, their large fintech investments will make them increasingly alike. Over time, it is anyone’s guess which of these firm types will win the race.

Keywords: big tech, Central bank digital currency, digital currency, financial innovation, financial institutions, financial regulation, Financial Services, Fintech, peer-to-peer lending, Remittances

JEL Classification: G20

Suggested Citation

Cecchetti, Stephen G. and Schoenholtz, Kermit, Finance and Technology: What is Changing and What is Not (October 1, 2020). CEPR Discussion Paper No. DP15352, Available at SSRN: https://ssrn.com/abstract=3723541

Stephen G. Cecchetti (Contact Author)

Brandeis International Business School ( email )

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National Bureau of Economic Research (NBER) ( email )

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Centre for Economic Policy Research (CEPR) ( email )

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Kermit Schoenholtz

New York University (NYU) - Leonard N. Stern School of Business ( email )

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New York, NY
United States

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