The Future of Finance
“Banks perform payment and transfer functions for an economy. The Internet can now facilitate and even perform these functions. It is changing the way that transactions are recorded on ledgers and is facilitating both public and private digital currencies. In the past, banks operated in a world of information asymmetry between themselves and their borrowers (clients), but this is changing. This differential gave one bank an advantage over another due to its knowledge about its clients. The digital transformation that financial technology brings reduces this advantage, as this information can be digitally analyzed. Even the nature of deposits is being transformed. Banks in the future will have to accept deposits and process transactions made in digital form, either Central Bank Digital Currencies (CBDC) or cryptocurrencies. This presents a number of issues: (1) it changes the way financial services will be delivered, (2) it requires a discussion on resilience, security and competition in payments, (3) it provides a building block for better cross border money transfers and (4) it raises the question of private and public issuance of money. … A review of financial technology and banking literature is provided by Thakor (2020). He highlights that financial service companies are now being provided by non-deposit taking contenders. This paper addresses one of the four research questions raised by his review, namely how theories of financial intermediation can be modified to accommodate banks, shadow banks, and non-intermediated solutions” (Broby, 2021).
This article was valuable for my research on the future of financial possibilities within an online baning app. Throughout this article it highlights the systematic transformation that the banking industry at large is going through because of the advancement in technology. Banking today is massively different then even 20 - 30 years ago and it continue to change every day. Historically banks have had almost sole access to the financial information of the customers financial information.
However with the advancement in technology the fincanicla information of customers could be opened up more to give more personalized financial planning and that allows for users to save more according to the needs and responds to the spending behaviors of the individuals. The banking apps that we use are not just their own isolated product but should fit within and work in an ecosystem designed to support the needs of the users, creatin a sense of trust between both parties.
References:
Broby, D. (2021). Financial technology and the future of banking. Financial Innovation, 7(47). Springer.
Ai was not used in the creation of this article
