FSB Report Assesses Fintech Implications for Financial Services

A new report from the Financial Stability Board (FSB) assesses the potential impact fintech companies and third-party service providers will have on the global financial system.

While CUNA and the state leagues acknowledge that fintechs can offer consumer benefits including increased speed, convenience and new product offerings that make it easier for them to manage their financial lives, the trades have urged lawmakers and regulators to ensure a level playing field between fintech companies and financial institutions.

The FSB report notes the positive impacts technological innovation can have on financial institutions, including increased access to services, more product offerings, greater convenience and lower costs.

Some key considerations from the FSB’s analysis of the link between technological innovation and market structure include the following:

  • To date, the relationship between incumbent financial institutions and FinTech firms appears to be largely complementary and cooperative in nature.
  • The competitive impact of BigTech may be greater than that of FinTech firms. BigTech firms typically have large, established customer networks and enjoy name recognition and trust.
  • Reliance by financial institutions on third-party data service providers (e.g. data provision, cloud storage and analytics, and physical connectivity) for core operations is estimated to be low at present. However, this warrants ongoing attention from authorities.