For consumers, they could mean more choice; better-targeted services; and keener pricing. For everyone, FinTech may deliver a more inclusive financial system, domestically and globally; with people better connected, more informed and increasingly empowered. 2  1  Especially the balance between inside money (created by commercial banks) and outside money (created by central banks). 2  FinTech could play a role in helping to address a worrying decline in the provision of correspondent banking services which support cross-border payment and settlement. Half of emerging market and developing economy jurisdictions, three quarters of large banks and a majority of local and regional respondent banks recently reported a decline in such services. Know-your-customer utilities and potentially distributed ledger technologies  2  BIS central bankers’ speeches  These benefits spring from FinTech’s potential to deliver a great unbundling of banking into its core functions of settling payments, performing maturity transformation, sharing risk and allocating capital. This would mean revolution, fundamentally re-shaping the financial system. At the same time, some financial technologies could make incumbent banks more efficient and profitable, reinforcing existing economies of scale and scope in banking. This would mean a restoration, reinforcing incumbents’ power. The balance of these forces may yield a third alternative – a reformation – a more diverse, resilient and effective system for consumers. One where large banks exist alongside new entrants who compete across the value chain.

Money and credit, the universal instruments of commerce, could not exist without this most fundamental of financial technologies, which allows debits and credits to be netted off; debt to circulate as currency; money to replace memory; and with it, trade to expand exponentially. How much have we progressed since Keynes’ bed-ridden globalisation? Replace “telephone” with a “tablet” and “tea” with a “soy latteccino” and you have not the start of the Twentieth Century but the Twenty First, a century in which opportunities are no longer limited to men or denizens of the City. Nonetheless, finance continues to be arranged around a series of hubs like brokers, clearing houses and exchanges; whereas, in other domains, people form connections directly, instantaneously and openly, and this is revolutionising how they consume, work, and communicate. The extent to which finance continues democratising and transforming depends on superficially arcane, but fundamentally vital, enabling technologies. The emergence of mobile telephony, the ubiquity of the internet, availability of high-speed computing, advances in cryptography, and innovations in machine learning could combine to enable rapid changes in finance – just as they have in other areas of the economy. The ledger, once stone, wood, or paper – and always centralised – is now digital and may become distributed. FinTech has the potential to deliver more resilient financial infrastructure, more effective trade and settlement, and new ways to encode, share and analyse data. For the financial sector, these could offer shorter, speedier transaction chains; greater capital efficiency; and stronger operational resilience.