Fsb fintech and market structure

FinTech and market structure in financial services:

Market developments and potential financial stability implications

14 February 2019

The Financial Stability Board (FSB) is established to coordinate at the international level the

work of national financial authorities and international standard-setting bodies in order to

develop and promote the implementation of effective regulatory, supervisory and other

financial sector policies. Its mandate is set out in the FSB Charter, which governs the

policymaking and related activities of the FSB. These activities, including any decisions

reached in their context, shall not be binding or give rise to any legal rights or obligations under

the FSB’s Articles of Association.

Contacting the Financial Stability Board

Sign up for e-mail alerts: www.fsb.org/emailalert

Follow the FSB on Twitter: @FinStbBoard

E-mail the FSB at: [email protected]

Copyright © 2019 Financial Stability Board. Please refer to: www.fsb.org/terms_conditions/

iii

Table of Contents

Page

Executive summary.................................................................................................................... 1

1. Background and definitions ............................................................................................... 3

2. Financial innovation and links to market structure ............................................................ 5

2.1 Supply factors – technological developments............................................................ 6

2.2 Supply factors – regulation ........................................................................................ 8

2.3 Demand factors – changing customer expectations................................................. 10

3. The current landscape....................................................................................................... 11

3.1 Impact to date of FinTech firms............................................................................... 11

3.2 Impact of BigTech firms.......................................................................................... 12

3.3 Third-party service providers (e.g. cloud computing and financial market data).... 16

3.4 How firms utilise cloud computing.......................................................................... 16

4. Conclusions on financial stability and implications......................................................... 17

4.1 Summary of findings................................................................................................ 17

4.2 Implications.............................................................................................................. 19

Glossary.................................................................................................................................... 21

Annex 1: The use of cloud computing by financial institutions .............................................. 22

Annex 2: FinTech credit in China, Korea, and the UK............................................................ 24

Annex 3: The impact of Yu’e Bao and other non-bank payment institutions’ online money

market funds on market structure in China .............................................................................. 27

Annex 4: Non-bank payment institutions in China.................................................................. 30

Contributors to the report ......................................................................................................... 32