Past Event

Banking disrupted by FinTech and Big Tech

Today banks are facing competition from non-bank firms whose core strategy is based on technological innovation - Big Tech and Fin Tech. What is in store for the future of banking?

Date: October 9, 2019, 12:30 pm Topic: Finance & Financial Regulation

VIDEO & AUDIO RECORDINGS

SUMMARY

Introducing the 22nd edition of the Geneva Reports on the World Economy, co-author and Bruegel scholar Nicolas Véron lays out the challenges that traditional banks are facing given modern technology. Discussions began with an overview of traditional banks, defined by their government charter. While engaging in many activities, in essence, a bank’s business is to take deposits and make loans. These roles are being challenged and the definition becomes an increasingly blurry line with the emergence of FinTech and Big Tech. The Geneva report therefore explores the question: Does technology challenge big banks?

FinTech companies excel in speed, customisation, and are digitally adept. Bigtech companies including Facebook, Apple, Google, and Amazon in the United States, along with Baidu, Alibaba and Tencent in China, boast an enormous scale of reach, and have both public trust and data. Banks remain the upper hand in customer experience, and their policy base gives them the ability to lobby. Véron encourages everyone interested to read the report in order to better understand the dynamics posed between these groups. He then recognises how early we are in the stage of competition, and that many questions are yet to be answered: How will banks evolve? How will banks embrace FinTech? How will policy respond?

The Geneva report outlines previous banking evolutions and identifies underlying themes. What is new with this challenge is how big Big Tech truly is. Libra gave a wake-up call to policy makers that FinTech will continue to grow, and policy needs to be implemented. Véron again encourages all to read the report to further understand the challenges and implications of banking competition.

Opening up the panel to a discussion, Teunis Brosens, senior economist at ING, remains confident that banks will not go away. He poses the question whether Big Tech firms are willing to become banks or not. Emphasising the regulatory role of traditional banks, Brosens sees the next steps to moving forward as a levelling of the playing field both in local and global spheres specifically in terms of data sharing.

Sam Taussig, head of global policy at Kabbage, an Atlanta based small business credit platform, expands on his view of the future of banking, agreeing that traditional banks are not obsolete. From his perspective, customers will use FinTech’s user friendly interface, who will be backed by the regulatory base of a bank. The main concerns here are of anti-trust and data ownership.

Rebecca Christie, a Bruegel scholar, posed questions of redlining and regulation. She questions how intra-bank competition will affect this evolution, and whether fees will remain a setback for banks. After a discussion led by Christie, the floor was opened up to Q&A where the panel shared their thoughts on shadow banks, the need for specialised licenses, and the role of central banks in creating cryptocurrencies.

Notes by Larissa Nowjack

Materials

Presentation by Nicolas Véron

Schedule

Oct 09, 2019

12:30-13:00

Check-in and lunch

13:00-13:20

Presentation

Nicolas Véron, Senior Fellow

13:20-14:10

Comments and panel discussion

Chair: Rebecca Christie, Visiting Fellow

Teunis Brosens, Senior Economist at ING

Sam Taussig, Head of Global Policy, Kabbage

Nicolas Véron, Senior Fellow

14:10-14:30

Q&A

14:30

End

Speakers

Teunis Brosens

Senior Economist at ING

Rebecca Christie

Visiting Fellow

Sam Taussig

Head of Global Policy, Kabbage

Nicolas Véron

Senior Fellow

Location & Contact

Bruegel, Rue de la Charité 33, 1210 Brussels

Matilda Sevon

[email protected]

Read about event
 

Past Event

Past Event

POSTPONED: Banking on Digital: a conversation with Ana Botin, Executive chairman of Santander Group

This event will feature a conversation between Anna Botin and Guntram Wolff on the future of the European Banking sector in face of the digital revolution.

Speakers: Ana Botin and Guntram B. Wolff Topic: Finance & Financial Regulation, Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: March 25, 2020
Read about event More on this topic
 

Past Event

Past Event

Hybrid threats in the financial system

This one-day workshop focused on hybrid threats in the context of the financial system by examining vulnerabilities and raising awareness, looking for solutions in the form of effective protection measures and improved resilience.

Speakers: Atso Andersén, Heiko Borchert, Dirk Clausmeier, Maria Demertzis, Päivi Heikkinen, Nina Lange, César Pérez-Chirinos, Jukka Savolainen, Teija Tiilikainen, Nicolas Véron, Jaakko Weuro and Guntram B. Wolff Topic: Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: February 12, 2020
Read article More on this topic More by this author
 

Podcast

Podcast

Banking after Brexit

Will Brexit damage Britain's financial services industry? Or is talk of its diminished status just a storm in a teacup? The City of London could move closer to Wall Street or it might become "Singapore-on-Thames". Nicholas Barrett talks to Rebecca Christie about banking after Brexit.

By: The Sound of Economics Topic: Finance & Financial Regulation Date: January 16, 2020
Read about event More on this topic
 

Past Event

Past Event

Recovery and Resolution Planning for Europe’s cross-border banks

This workshop will discuss recovery and resolution plans in the CEE countries

Speakers: Sebastiano Laviola, Alexander Lehmann, Boris Vujčić, Alexander Benkwitz, Roland Mechtler, Sofia Toscano Rico, Krzysztof Broda, Radek Urban, Dejan Vasiljev, Emil Vonvea and Guntram B. Wolff Topic: Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: December 6, 2019
Read article More on this topic More by this author
 

Podcast

Podcast

How not to spend it

Buying a car, a house or a cryptocurrency has never been easier: with a simple click, digital banking has made financial operations accessible to everyone. But, while Fintech has become widespread, financial literacy does not seem to keep up the pace. This week Maria Demertzis and Nicholas Barrett are joined by Annamaria Lusardi, Denit Trust Endowed Chair of Economics and Accountancy from George Washington University School of Business to discuss financial literacy.

By: The Sound of Economics Topic: Finance & Financial Regulation Date: October 31, 2019
Read about event More on this topic
 

Past Event

Past Event

Financial and digital literacy in the age of fintech

How to ensure the safe use of digital payments and other technological innovations in the area of personal finance?

Speakers: Maria Demertzis and Annamaria Lusardi Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: October 23, 2019
Read article More on this topic
 

Opinion

Banking, FinTech, Big Tech: Emerging challenges for financial policymakers

FinTech and Big Tech firms are both increasingly stepping on banks’ traditional turf. This column introduces the 22nd Geneva Report on the World Economy, which looks at the challenges generated by new technology-enabled entrants to the global banking industry and the public authorities that oversee it. It argues that to respond adequately to the FinTech/Big Tech challenge, authorities will need to raise their game and enter uncharted territories.

By: Kathryn Petralia, Thomas Philippon, Tara Rice and Nicolas Véron Topic: Finance & Financial Regulation Date: September 26, 2019
Read article More on this topic More by this author
 

Podcast

Podcast

Backstage at BAM19: How much further reform is needed for the new financial sector?

Backstage at the Bruegel Annual Meetings, Rebecca Christie talks with Nicolas Véron on the new financial sector.

By: The Sound of Economics Topic: Finance & Financial Regulation Date: September 5, 2019
Read article Download PDF
 

Policy Contribution

The economic potential and risks of crypto assets: is a regulatory framework needed?

What is the economic potential and the risks of crypto assets? Regulators and supervisors have taken great interest in these new markets. This Policy Contribution is a version of a paper written at the request of the Austrian Presidency of the Council of the European Union for the informal ECOFIN meeting of EU finance ministers and central bank governors.

By: Maria Demertzis and Guntram B. Wolff Topic: European Macroeconomics & Governance, Testimonies Date: September 6, 2018
Read article More on this topic
 

External Publication

Capital Markets Union and the Fintech Opportunity

Fintech has the potential to change financial intermediation structures substantially. It could disrupt existing financial intermediation with new business models empowered by intelligent algorithms, big data, cloud computing and artificial intelligence.

By: Maria Demertzis, Silvia Merler and Guntram B. Wolff Topic: Finance & Financial Regulation Date: March 26, 2018
Read article More on this topic
 

Blog Post

No Financial Meltdown

Intel suffered only minimal pain in the stock market following revelations about the ‘Meltdown’ hardware vulnerability. But if the market won’t compel providers to ensure the safety of their hardware, what will?

By: Alexander Roth and Georg Zachmann Topic: Innovation & Competition Policy Date: January 15, 2018
Read article More by this author
 

Blog Post

The Bitcoin Bubble

The price of bitcoin has just passed $11,000. A year ago it was worth less than $800. Economists and commentators are thus increasingly concerned that this may be a bubble waiting to burst. We review recent opinions on the topic.

By: Silvia Merler Topic: Finance & Financial Regulation, Global Economics & Governance Date: December 4, 2017
Load more posts