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Financial Intermediation and Technology: What’s Old, What’s New?
Author:
Mr. Arnoud W.A. Boot
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,
Peter Hoffmannnull

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Mr. Luc Laeven
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Mr. Lev Ratnovski
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Series:
IMF Working Papers
Volume/Issue:
Volume 2020: Issue 161
Language:
English
Publication Date:
07 Aug 2020
DOI:
https://doi.org/10.5089/9781513552491.001
ISBN:
9781513552491
ISSN:
1018-5941
Pages:
32
Keywords:
WP; bank; firm; customer; financial service; provider; Bigtech firm; technology firms information; financial system; monetary policy; customer interface; adverse selection; market power; Communications in revenue administration; Technological innovation; Financial statements; Credit; Europe; Financial Intermediation; Financial Innovation; Fintech; Information; Communication; natural monopoly; legacy bank
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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We study the effects of technological change on financial intermediation, distinguishing between innovations in information (data collection and processing) and communication (relationships and distribution). Both follow historic trends towards an increased use of hard information and less in-person interaction, which are accelerating rapidly. We point to more recent innovations, such as the combination of data abundance and artificial intelligence, and the rise of digital platforms. We argue that in particular the rise of new communication channels can lead to the vertical and horizontal disintegration of the traditional bank business model. Specialized providers of financial services can chip away activities that do not rely on access to balance sheets, while platforms can interject themselves between banks and customers. We discuss limitations to these challenges, and the resulting policy implications.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2020: Issue 161