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Fintech as a Precondition of Transformations in Global Financial Markets

Author

Listed:
  • Sergey Belozyorov

    (St. Petersburg State University (Russia))

  • Olena Sokolovska

    (St. Petersburg State University (Russia))

  • Young Sik Kim

    (Gangneung-Wonju National University (Republic of Korea))

Abstract

The article considers opportunities, risk and challenges of development of digital financial technologies. To identify them we use the scenario approach. We determine three main development scenarios for the market of innovative financial technologies — “domination of traditional financial companies”, “segmentation of market of new financial technologies’, and “domination of digital financial companies”, in terms of their probability and possible consequences for the global financial markets. The results of analysis allowed to suggest that among main scenarios of FinTech development the most probable is the splitting of existing market, that in perspective can generate into the market of digital transnational financial corporations, which will squeeze out both small companies and traditional financial giants. However, although the scenario of capturing the financial market by big players is currently unlikely, but it is certainly more important in terms of the consequences for the global markets. The main prerequisite for the latest scenario is the promotion of international cooperation in the regulation of digital financial companies. Such a prerequisite requires new models of country-level interaction in regulation of innovative financial companies in order to address risks and challenges of different scenarios of FinTech development in global financial markets. The article includes comparative analysis of digital development in Russia and Republic of Korea, which is one of the key players on the Asian FinTech market, as a possible benchmark to shape policies of intergovernmental cooperation in the global financial markets. These policies include 1) a regulatory cooperation that reduces regulatory risks due to growing experience in regulation of innovative financial companies; 2) an investment cooperation allowing to acquire additional experience in regulatory practices and to develop infrastructure, which meets new requirements of digital finance; and 3) a cooperation on taxation of FinTech companies that reduces cross-border regulatory arbitrage.

Suggested Citation

  • Sergey Belozyorov & Olena Sokolovska & Young Sik Kim, 2020. "Fintech as a Precondition of Transformations in Global Financial Markets," Foresight and STI Governance (Foresight-Russia till No. 3/2015), National Research University Higher School of Economics, vol. 14(2), pages 23-35.
    • Handle: RePEc:hig:fsight:v:14:y:2020:i:2:p:23-35
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    References listed on IDEAS

    as
    1. Bernardo Nicoletti, 2017. "The Future of FinTech," Palgrave Studies in Financial Services Technology, Palgrave Macmillan, number 978-3-319-51415-4, June.
    2. Seong Soo Kim & Yo Sop Choi, 2019. "The Innovative Platform Programme in South Korea: Economic Policies in Innovation-Driven Growth," Foresight and STI Governance (Foresight-Russia till No. 3/2015), National Research University Higher School of Economics, vol. 13(3), pages 13-22.
    3. Heimerl, Veronika & Raza, Werner, 2018. "Digitalization and development cooperation: An assessment of the debate and its implications for policy," Briefing Papers 19, Austrian Foundation for Development Research (ÖFSE).
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    6. Asli Demirguc-Kunt & Dorothe Singer & Leora Klapper & Saniya Ansar & Jake Hess, 2018. "Global Findex Database 2017 [La base de datos Global Findex 2017]," World Bank Publications - Books, The World Bank Group, number 29510.
    7. Bernardo Nicoletti, 2017. "Financial Services and Fintech," Palgrave Studies in Financial Services Technology, in: The Future of FinTech, chapter 2, pages 3-29, Palgrave Macmillan.
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    Cited by:

    1. Sergey A. Belozyorov & W. Wang & Y. Liu, 2022. "Analysis of Regional Differences and Influencing Factors of China's Digital Economy Development," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 21(3), pages 486-513.
    2. Ruihui Pu & Deimante Teresiene & Ina Pieczulis & Jie Kong & Xiao-Guang Yue, 2021. "The Interaction between Banking Sector and Financial Technology Companies: Qualitative Assessment—A Case of Lithuania," Risks, MDPI, vol. 9(1), pages 1-22, January.

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    More about this item

    Keywords

    FinTech; digital economy; scenario approach; global financial markets; financial inclusion; international cooperation; regulation; finance; investment; regulation; risks; Russian Federation; Republic of Korea; comparative analysis;
    All these keywords.

    JEL classification:

    • F59 - International Economics - - International Relations, National Security, and International Political Economy - - - Other
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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