TY - JOUR

T1 - Fintech as a precondition for transformations on global financial markets

AU - Belozyorov, Sergey

AU - Sokolovska, Olena

AU - Kim, Young Sik

N1 - Funding Information: This study was carried out with the financial support of the Russian Foundation for Basic Research in the frame-work of the research project No. 20-010-00785 “Digital financial technologies as a factor in the development of the insurance market in the Russian Federation”.

PY - 2020

Y1 - 2020

N2 - The article considers the opportunities, risks, and challenges associated with the development of digital financial technologies. To identify them, we used the scenario approach. We determined three main development scenarios for the market of innovative financial technologies — “domination of traditional financial companies”, “segmentation of market of new financial technologies’, and “domination of digital financial companies” in terms of their probability and possible consequences for the global financial markets. The results of analysis allowed us to suggest that among main scenarios of fintech development the most probable is the splitting of existing market, which in the future can turn into a market of digital transnational financial corporations, which will squeeze out both small companies and traditional financial giants. However, although the scenario of capturing the financial market by large players is currently unlikely, it is certainly more important in terms of the consequences for global markets. The main prerequisite for the latter scenario is the promotion of international cooperation in the regulation of digital financial companies. Such a condition requires new models of country-level interaction in the regulation of innovative financial companies in order to address the risks and challenges of different scenarios of fintech development on global financial markets. This article includes a comparative analysis of digital development in Russia and the Republic of Korea, which is one of the key players on the Asian fintech market, as a possible benchmark that can be used to shape the policies of intergovernmental cooperation on global financial markets. These policies include 1) regulatory cooperation that reduces risks due to growing experience in the regulation of innovative financial companies; 2)cooperation in investments that allow one to acquire additional experience in regulatory practices and to develop infrastructure, which meets the new requirements of digital finance; and 3) cooperation in the taxation of fintech companies that reduces cross-border regulatory arbitrage.

AB - The article considers the opportunities, risks, and challenges associated with the development of digital financial technologies. To identify them, we used the scenario approach. We determined three main development scenarios for the market of innovative financial technologies — “domination of traditional financial companies”, “segmentation of market of new financial technologies’, and “domination of digital financial companies” in terms of their probability and possible consequences for the global financial markets. The results of analysis allowed us to suggest that among main scenarios of fintech development the most probable is the splitting of existing market, which in the future can turn into a market of digital transnational financial corporations, which will squeeze out both small companies and traditional financial giants. However, although the scenario of capturing the financial market by large players is currently unlikely, it is certainly more important in terms of the consequences for global markets. The main prerequisite for the latter scenario is the promotion of international cooperation in the regulation of digital financial companies. Such a condition requires new models of country-level interaction in the regulation of innovative financial companies in order to address the risks and challenges of different scenarios of fintech development on global financial markets. This article includes a comparative analysis of digital development in Russia and the Republic of Korea, which is one of the key players on the Asian fintech market, as a possible benchmark that can be used to shape the policies of intergovernmental cooperation on global financial markets. These policies include 1) regulatory cooperation that reduces risks due to growing experience in the regulation of innovative financial companies; 2)cooperation in investments that allow one to acquire additional experience in regulatory practices and to develop infrastructure, which meets the new requirements of digital finance; and 3) cooperation in the taxation of fintech companies that reduces cross-border regulatory arbitrage.

KW - Comparative analysis

KW - Digital economy

KW - Finance

KW - Financial inclusion

KW - Fintech

KW - Global financial markets

KW - International cooperation

KW - Investment

KW - Regulation

KW - Republic of Korea

KW - Risks

KW - Russian Federation

KW - Scenario approach

UR - http://www.scopus.com/inward/record.url?scp=85096405779&partnerID=8YFLogxK

UR - https://www.mendeley.com/catalogue/d00b9914-bbf2-339b-a912-9cc96e575d32/

U2 - 10.17323/2500-2597.2020.2.23.35

DO - 10.17323/2500-2597.2020.2.23.35

M3 - Article

VL - 14

SP - 23

EP - 35

JO - Foresight Russia

JF - Foresight Russia

SN - 2500-2597

IS - 2

ER -