Will Video Kill the Radio Star? Digitalisation and the Future of Banking

64 Pages Posted: 19 Jan 2022

See all articles by Thorsten Beck

Thorsten Beck

Florence School of Banking and Finance

Stephen G. Cecchetti

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

Magdalena Grothe

European Central Bank (ECB)

Malcolm Kemp

Nematrian Limited

Loriana Pelizzon

Leibniz Institute for Financial Research SAFE

Antonio Sánchez Serrano

European Systemic Risk Board

Date Written: January 1, 2022

Abstract

This report discusses the impact of digitalization on the structure of the European banking system. The recent wave of financial innovation based on the opportunities digitalisation offers, however, has come mostly from outside the incumbent banking system in the form of new financial service providers, either in competition or cooperation with incumbent banks but with the potential for substantial disruption. After discussing how identified risks may evolve and the emergence of new sources of risks, the report introduces three different scenarios for the future European banking system: (i) incumbent banks continue their dominance; (ii) incumbent banks retrench; and (iii) central bank digital currencies (under certain specifications). It also derives macroprudential policy measures.

Suggested Citation

Beck, Thorsten and Cecchetti, Stephen G. and Cecchetti, Stephen G. and Grothe, Magdalena and Kemp, Malcolm and Pelizzon, Loriana and Sánchez Serrano, Antonio, Will Video Kill the Radio Star? Digitalisation and the Future of Banking (January 1, 2022). ESRB: Advisory Scientific Committee Reports 2022/12, Available at SSRN: https://ssrn.com/abstract=4012413 or http://dx.doi.org/10.2139/ssrn.4012413

Thorsten Beck (Contact Author)

Florence School of Banking and Finance ( email )

Florence
Italy

Stephen G. Cecchetti

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States
212-720-8629 (Phone)
212-720-2630 (Fax)

Brandeis International Business School ( email )

415 South Street
Waltham, MA 02453
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Magdalena Grothe

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Malcolm Kemp

Nematrian Limited ( email )

Surry
United Kingdom

Loriana Pelizzon

Leibniz Institute for Financial Research SAFE ( email )

House of Finance
Theodor-W.-Adorno-Platz 3
Frankfurt, 60323
Germany

Antonio Sánchez Serrano

European Systemic Risk Board ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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