This presentation, FINTECH: Good and Bad News for Inclusive Sustainable Finance, will explore issues surrounding the rapid deployment of computerized electronic platforms, cryptocurrencies and algorithms now disrupting legacy financial firms and their models.
Good News: this disruption was long overdue and welcome where it overturns inefficient, inequitable, over-priced services, democratizing lending, investment, banking, payments, remittance and widens easy availability of transactions. Widespread adoption of Blockchain-based distributed ledgers offer closer monitoring of financial ethics and performance. Bad News: this electronic, information-rich disruption of legacy finance ranges from algorithmic high-frequency trading (HFT) we explored for the UN Inquiry (2015) to the rapid co-option and buyouts of companies in the FINTECH 100 by the big legacy banks; the excessive run-up in pre-IPO valuations, focusing on big wins, short-term profits – evidence of the same excesses and unsustainable practices needing reform. Even the ingenious market-based reform in IEX’s platform’s technological designed “speed bump” which levels the playing field for investors also can be subverted to extort fees by unscrupulous firms. Vulnerability, internet and spectrum capacity as well as security issues need attention.
While FINTECH offers so many opportunities for reforming and democratizing finance, the race is on to own and control these disruptive firms and their profits. Steering FINTECH firms toward globally inclusive, sustainable development goals as in the UN’s SDGs must now be built in. Ethical standards are key in optimal systemic design. How best to measure their social and environmental impacts, performance metrics and accounting, and monitor prudential architecture at global and national levels? How can we help design FINTECH for inclusive sustainable finance and markets?