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Fintechs could disrupt global financial systems, warns IMF’s Managing Director

Christine Lagarde, Managing Director, IMF

Addressing a symposium over the sidelines of a meeting of G20 Finance Ministers in Fukoka, Japan, International Monetary Fund’s Managing Director, Christine Lagarde said that a growing presence of tech giants could severely disrupt the world’s financial systems, tossing up sharp challenges for financial policymakers.

Lagarde acknowledged that technology always has, and will continue to spur innovation in finance. The question is whether these innovations will benefit all, or only a select few. She cited China’s technology industry as a prime example of this trade-off between benefits and challenges. Over the last five years, technology growth in China has been extremely successful and allowed millions of new entrants to benefit from access to financial products and the creation of high-quality jobs. But it has also led to two firms controlling more than 90% of the mobile payments market.

Adding that the growing dominance of Fintech could make existing payment systems vulnerable by putting them under control of a handful of tech giants, Lagarde said “A significant disruption to the financial landscape is likely to come from the big tech firms, who will use their enormous customer bases and deep pockets to offer financial products based on big data and artificial intelligence”.

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