The Rise of FinTech: Promises, Perils, and Challenges

FinTech innovations have transformed a variety of financial activities and have reshaped the structure of the financial market. This chapter provides a high-level overview of these transformations and examines their impacts on the financial market. It starts by identifying the key features of the current FinTech ecosystem: (1) massive processes of digitization and digitalization; (2) increasing use of Artificial Intelligence (AI) techniques; (3) increasing use of big data techniques; (4) and disintermediation. These features distinguish the current FinTech ecosystem from early applications of technologies to finance and form a framework through which the chapter proceeds to analyze the potential promises, perils, and regulatory challenges associated with the rise of FinTech.