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Governing Fintech and Fintech as Governance: The Regulatory Sandbox, Riskwashing, and Disruptive Social Classification

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  • Eric Brown
  • Dóra Piroska

Abstract

This article evaluates the sandbox approach as a regulatory answer to the challenges financial technology brings to finance and social relations. Taking fintech as a sociotechnological phenomenon embedded in discourses of solutionism and innovation, we show that the regulatory sandbox accepts these discourses. Instead of containing fintech, the sandbox is designed in a way that advances riskwashing of fintech even if it is disguised as risktaming. Next, we demonstrate fintech’s problematic nature that regulation should control. First, we propose that through its information processing capacity, fintech accelerates the transition from bank-based to market-based finance. Second, we demonstrate that fintech as part of a fintech-financialization apparatus has catallactic and value-extracting governance effects. Third, inserting the fintech-financialization apparatus into Fourcade and Healy’s argument on the social stratification effect of the data-driven economy, we argue that it also has a socially disruptive potential. We critique the regulatory sandbox for being a facilitator to this process and recommend increasing the number and power of veto players and veto points in complex regulatory regimes.

Suggested Citation

  • Eric Brown & Dóra Piroska, 2022. "Governing Fintech and Fintech as Governance: The Regulatory Sandbox, Riskwashing, and Disruptive Social Classification," New Political Economy, Taylor & Francis Journals, vol. 27(1), pages 19-32, January.
    • Handle: RePEc:taf:cnpexx:v:27:y:2022:i:1:p:19-32
    DOI: 10.1080/13563467.2021.1910645
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    Cited by:

    1. Chankook Park, 2022. "Expansion of servitization in the energy sector and its implications," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 11(4), July.
    2. Lee, Sungdo & Seo, Yongseok, 2022. "Exploring how interest groups affect regulation and innovation based on the two-level games: The case of regulatory sandboxes in Korea," Technological Forecasting and Social Change, Elsevier, vol. 183(C).
    3. Stavros Pantos, 2023. "Designing Stress Tests for UK Fast-Growing Firms and Fintech," Risks, MDPI, vol. 11(2), pages 1-22, January.
    4. Luiz Antonio Joia & Rodrigo Proença, 2022. "The social representation of fintech from the perspective of traditional financial sector professionals: evidence from Brazil," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-27, December.
    5. Wang, Haijun & Mao, Kunyuan & Wu, Wanting & Luo, Haohan, 2023. "Fintech inputs, non-performing loans risk reduction and bank performance improvement," International Review of Financial Analysis, Elsevier, vol. 90(C).

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