The Chance of FinTech to be a New General-Purpose Technology

Abstract

FinTech has often been spoken about in highly promising terms, deemed to have a profound and potentially revolutionary effect. This has led to speculation and intrigue about whether this innovative form of technology might have the capability to influence an entire economy significantly. More than that, some even contend that it carries the potential to alter societies dramatically through its direct impact on both existing economic frameworks and social structures. Thus, a vital question has risen to the forefront: could FinTech indeed be seen as a general-purpose technology? Following the initial inquiry, a second question emerges, delving deeper into the overall impact of FinTech. The focus is on understanding how it influences things at an aggregate level and as a potential general-purpose technology. How does it affect aggregate economic welfare? The paper conducts an in-depth analysis using two distinctly different definitions and characteristics of general-purpose technologies. By leveraging these definitions, the document provides valuable insights into how FinTech aligns with the attributes of a general-purpose technology, effectively showcasing that it can indeed be typified as such. Despite the growing body of research on FinTech, no study thus far has examined the implications or influence it has on welfare. At an aggregate level, the research findings indicate that FinTech influences supply curves positively. In turn, this results in a noticeable uptick in both consumer and producer surplus, bolstering overall welfare. The examination thus reveals how FinTech is indeed a reckoning force in modern economics, and potentially a game-changer. Thus, its significance as a general-purpose technology and the value it brings to aggregate economic welfare cannot be underestimated.