information technologies are now expected to have significant impacts particularly on the financial industry and financial services. there are various reasons behind such strong linkages between recent information technologies and financial services. first, finance is a sophisticated system of various information processing such as payment, settlement, investment decisions, and risk management. in this respect, the financial industry can be considered an " information industry. " second, some recent information technologies such as the " blockchain " and " distributed ledger technology, " or dlt, have the potential to significantly affect money and ledgers, which are the basic infrastructure for financial activities. moreover, wide - ranging innovations, which may significantly affect financial services, appeared almost simultaneously around the time of the global financial crisis. first, smartphones such as the iphone which was invented in 2007, enhanced the accessibility to various financial services. then, in 2008 the new technologies of the blockchain and dlt were created. moreover, artificial intelligence, or ai, and big data analytics have evolved greatly thanks to the dramatic increase in computing power. in addition, since the global financial crisis, new entrants to financial services have been welcomed, particularly in those countries where public funds were injected to financial institutions. this environment has also supported the development of fintech. promising potential of financial innovation recent financial innovation, symbolized by the word " fintech, " has huge potential to change the structure of financial services. first, fintech can " globalize " financial services. mobile phones and smartphones are now spreading rapidly in developing and emerging economies where financial services are not yet widespread. these new devices could substantially promote " financial inclusion, " by enabling people in those countries to access financial services such as mobile banking. indeed, the developing and emerging countries in asia and africa are keenly interested in fintech and mobile banking. second, fintech can " personalize " financial services. mobile phones and smartphones are designed as " personalized " tools because they were originally portable phones. by using these devices as new access points for financial services as well as advanced big data analytics, it is becoming easier to provide customized and personalized services to each user. third, fintech can " virtualize " financial services. with innovations in information technology, financial services providers can use the internet, smartphones, cloud computing, and ai as new tools for their activities. accordingly, tangible fixed infrastructure such as " brick and mortar " branches and atm networks are no longer prerequisites for providing financial services

. new issues stemming from financial innovation although there are many upsides of financial innovation, it also raises new issues and challenges for us. first and ironically, new information technologies have made sophisticated cyber - attacks possible. moreover, with the widespread use of the internet and smartphones for accessing financial services, financial networks are becoming increasingly " open. " accordingly, it is becoming much more important to take effective measures against cyber - attacks and maintain information security. second, financial authorities are extracting various information from the balance sheets of licensed financial institutions such as commercial banks. furthermore, the authorities use regulatory tools, such as capital requirements and liquidity standards, to impose constraints on these balance sheets in order to maintain financial stability. however, these measures may not be very effective for non - bank fintech firms, especially if they deal only with payment - related services, or if they match the supply and demand of funds without using their own balance sheet in their peer - to - peer, or p2p, lending. thus, financial authorities are facing new challenges in terms of obtaining information and maintaining financial stability. third, there are debates on whether and to what extent new types of transactions such as high - frequency trading and algorithm trading enabled by recent information technologies tend to increase market volatility. theoretically, if technological innovation makes transactions more efficient, it could also contribute to market efficiency by increasing liquidity, for example. nonetheless, in view of the recent developments in various countries, policymakers must develop a deeper understanding of the impact of these new transactions on financial markets. even though new technologies bring new challenges, it may not be wise to try to stop technological innovation. i believe that policymakers should try to maximize the benefits and minimize the negative sides of technological innovation. in some sense, technological innovation reflects the basic human nature of " intellectual adventure. " i believe that human beings are inherently curious and search for better ideas to resolve problems, and that they have a genuine desire to communicate and share such ideas with other people. thus, i do not think it is easy to suppress such human characteristics. i believe the reason why smartphones have instantly become popular worldwide is that they were originally designed to be " tools for communication, " thus satisfying a basic human desire. moreover, if new information technologies are truly advanced ones, we should be able to utilize them also for enhancing information security and maintaining people's trust in financial transactions. to ensure that people support financial innovation and fintech, it is also important to