The impact of the FinTech revolution on the future of banking: Opportunities and risks

TLDR

FinTech is rapidly transforming the global banking sector, with regulation, infrastructure, and geopolitical factors shaping its future. This paper reviews the literature on FinTech and FinTech‑enabled services to assess opportunities and risks for banks. The authors analyze high‑quality bank‑level data from 115 countries over 16 years, computing statistical moments of key indicators to map the evolving banking landscape. FinTech lenders are unlikely to replace banks, as banks develop their own platforms or partner with start‑ups, and the study highlights promising research avenues and policy implications.

Abstract

The financial technologies (FinTech) revolution is in full swing globally. In this paper, we review the burgeoning literature on FinTech and FinTech-enabled services, focusing on the opportunities and risks for banks. Using high quality bank level data from 115 countries around the world for the past 16 years, we compute statistical moments of some key indicators of the changing banking landscape in the FinTech era. Our preliminary findings suggest that it is unlikely that FinTech lenders will replace banks, perhaps because banks are developing their own FinTech platforms or working with FinTech start-ups. We also showcase how regulation, global infrastructures and geopolitical frictions will shape the future of banking. We identify some promising research ideas; we also summarize some key implications, from existing research, for policy makers and practitioners.