Harnessing the fintech revolution to a better future

Innovation drives progress by disrupting the status quo and forcing established players to raise their game. But innovation can also be destructive if it is not managed properly, and financial innovation (fintech) is no exception.

New technologies developed by fintech startups and the major Silicon Valley companies are making banking and financial services more efficient and accessible than ever before. In fact, new players and technologies have brought the financial industry to a crossroad, and it would not be surprising to see some legacy financial companies suffer the same fate as Kodak, once the world leader in photography. To navigate the road ahead, policymakers must ensure a level playing field that is suitable for new products and business models, while minimizing the risk that disruption becomes destructive.

Fintech startups benefit from cost-effective cloud-based information technology (IT) services, an absence of legacy IT costs, and adaptable business models. And as later entrants to the market, they can learn from the mistakes of incumbents and their predecessors. This explains why startups have been making deep inroads into services that boost financial inclusion, such as peer-to-peer lending and mobile remittances and payments.