Montag, 27.05.2019 01:42 Uhr

Technological progresses and national regulators

Verantwortlicher Autor: Carlo Marino Rome, 27.11.2018, 09:20 Uhr
Presse-Ressort von: Dr. Carlo Marino Bericht 5110x gelesen

Rome [ENA] Technological progresses such as artificial intelligence (AI) and blockchain are transforming the investment industry. Technology has created new chances to create several financial services in recent times. The number of the so-called ‘FinTech’ services and their providers is continuously developing. In a scenario where Amazon, Facebook and Google are moving from information technology to communications services,

IT and communications stocks are going to be reorganized. The telecommunication services sector has been increased and rebranded communication services. E-commerce companies have shifted from information technology to consumer discretionary (term given to goods and services that are supposed non-essential by consumers, but attractive if their available income is sufficient to purchase them). Among the most relevant innovations technology has created are new banking and payment options and financial tools such as mobile wallets, cryptocurrencies and crowdfunding.

Notwithstanding the unlimited possibilities that technology provides to the market, the interaction between the traditional current financial services providers, newcomers and technological companies combined with the absence of concreteness of the technological services nature can bring new competition and regulatory challenges to the market. Against this milieu, one has to investigate the potential competition issues related to the boom of the financial technologies development. The features of the FinTech ecosystem, including the services, the relevant market, the user’s perception and the providers of such services are crucial .

Potential anticompetitive factors and their impact on the relevant market and a selection of most developed FinTech services also have to be taken into account. The FinTech services are enclosed into the general digital transformation of businesses and have give rise to the lessening of barriers to entry, to the disintermediation of the value chain, to new business models based on platforms and sharing economies and more effectual provision of services. The main actors engaged in such technologies are newcomers, such as start-ups, traditional financial services providers and technological companies. They represent more than 3800 companies globally, of which 1020 are located in the European Union.

A recent study available on the internet at: names the minimum criteria to define the services provided as FinTech suggesting a classification of seven key FinTech services by taking into account the offered FinTech services as well as those that are expected to be provided in the coming years. These services include: (1) banking; (2) payments, (2) transfers and Forex, Digital currencies, (4) Wealth and Asset management, (5) Personal financial management, (6) Insurance and (7) Enabling technologies and infrastructures, such as artificial intelligence and cybersecurity.

Independent from business models, common competition doubts include: • the interoperability between technologies that may be used as a market barrier for new players. And doubts that standardization may conduct to diminished ambitions to innovate; • the definition of the pertinent market and the question if services can be considered as substitutes depend from how users perceive and use the platform. If certain patterns are developed, the role of network effects has to be considered to assess where market power comes from;

• the use of data-intensive technologies brings along the issue of data portability and the ability to ignore certain users; access and use of data can lead to market power and if datasets are cross used and allow to influence a market position gained in a different sector into the provision of FinTech services.In banking for instance, the difference in the methods of national regulators could act as a barrier of entry for new players. Taking another example from the field of cryptocurrencies, issues of competition between different cryptocurrencies (intercryptocurrency market) may cause substantial barriers to entry for new cryptocurrencies.

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