The Basel Committee on Banking Supervision today published its Sound Practices on the implications of fintech developments for banks and bank supervisors. The paper assesses how technology-driven innovation in financial services, or "fintech", may affect the banking industry and the activities of supervisors in the near to medium term.
The paper is based on the analysis of various potential future scenarios and draws on surveys with bank supervisors. Five stylised scenarios describing the potential impact of fintech on banks were identified as part of an industry-wide scenario analysis:
Against this backdrop, current observations suggest that, although the banking industry has undergone multiple innovations in the past, the rapid adoption of enabling technologies and emergence of new business models pose various opportunities and risks to incumbent banks in almost all the banking industry scenarios considered. Banking standards and supervisory expectations should be adaptive to new innovations, while maintaining appropriate prudential standards.
The fintech paper published today took account of comments received on the Committee's August 2017 consultative document. The consultative process helped to identify key implications and related considerations for banks and bank supervisors.
Re-disseminated by The Asian Banker