In a speech given at the London Business School Centre for Corporate Governance, and the Bank of England’s FinTech Revolution Conference, Andy Haldane discussed whether an industrial revolution was occurring in financial services. The speech discussed the increasing role of disruptive technology in a sharing economy, digital currencies and Big Data and focused on whether these factors were leading to greater awareness of the “FinTech Phenomenon” as a paradigm shift in business finance, particularly for SMEs.
Regarding payments and lending, the increasing role of peer-to-peer lending was discussed, with the market totalling £3.2 billion in 2015, with increases in both consumer lending, business lending and equity crowd funding. This will inevitably raise the question of how “alternative” is alternative finance, and also prompt concern regarding the regulation of the sector.
This shift in the importance of FinTech is important for the financial sector due to:
- The influx of new entrants that may help with diversity and stability.
- Lower margins and higher volumes that may create higher productivity and a more efficient financial system.
- Greater access and lower cost that may improve the social value of the financial system.