While FinTech can address some of the financial system’s longstanding and endemic problems, the industry and regulators should be aware of the potential risks. Speaking at the Lendit USA conference this week, John C. Williams, president and CEO of the San Francisco Fed, observed:  “The laws of innovation often mirror the laws of physics: For every great stride, there is an equal and opposite risk.”

Williams said that innovative new entrants could make inroads to addressing issues from poverty and inequality, criminal activity, and access to the financial system. “There’s no question that FinTech is going to change the face of financial services on a global scale. I am excited for the changes to come, and I see the potency of the possible. But for its potential to be met, we need to make sure we don’t reinvent or exacerbate shortcomings that have plagued our financial system thus far.”

He added that well-designed regulation, protecting consumers, fosters inclusionary rather than exclusionary practices, and enhances the fairness and resilience of the financial system. This should help rather than hinder FinTech’s contribution to creating a better financial system and economy.

By Scott Thompson

 

 

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by Scott Thompson
Scott is Senior Editor at IBS Intelligence. You can follow him on Twitter and contact him at: Scott.Thompson@ibsintelligence.com
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