Technology Driven Innovations in Financial Services

Financial systems worldwide are increasingly experiencing the mounting pressure of the technology based financial innovations. Some of these developments are generating alternative financial structures, existing parallelly to the “old” ones whereas some others are simply replacing the “old” ones. Alternative inter-mediating institutions are gaining ground vis a vis encumbents, relying on their technological and market supremacy. The space for traditional financial inter-mediation becomes increasingly under the competition of the new solutions. Some technological solutions provide additionally for the partial or entire disinter-mediation of the financial services and thus removing some existing transaction costs and matching directly economic agents. Digitization and data-fication, coupled with artificial intelligence, are offering new immense operational opportunities and economic benefits. On the other hand they are also the source of new risks to the financial and economic systems, financial stability, national security and consumer well-being, which need to be properly addressed. We review in this paper principal components of the current stream of technology based financial innovations, its main drivers, as well as discuss major strategic issues and impacts that we are facing in this area