The Dark Side of Digital Financial Transformation: The New Risks of FinTech and the Ris... - 0 views
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John Kiff on 16 Dec 19As a result of the digitization and datafication of finance, combined with new technologies, cybersecurity and technological risks are now evolving into major threats to financial stability and national security. In addition, the entry of major technology firms into finance - TechFins - brings new issues. The first arises in the context of new forms of potentially systemically important infrastructure (such as data and cloud services providers). The second arises because data - like finance - benefits from economies of scope and scale and from network effects and - even more than finance - tends towards monopolistic or oligopolistic outcomes, resulting in the potential for systemic risk from new forms of "Too Big to Fail" and "Too Connected to Fail" phenomena. This paper suggests some basic principles about how such risks can be monitored and addressed, focusing in particular on the role of regulatory technology ("RegTech").