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IMF's Lagarde highlights potential disruptive nature of fintech

By Leika Kihara

 

Branch app, an online financial micro lending platform is seen on a mobile phone in this photo illustration taken May 23, 2018. REUTERS/Thomas Mukoya/Illustration/File Photo

 

FUKUOKA (Reuters) - International Monetary Fund Managing Director Christine Lagarde warned on Saturday that the increasing presence of technology giants using big data and artificial intelligence could cause a significant disruption to the world's financial system.

 

The rapid development of financial technology (fintech) has increased access to cheap payment and settlement systems for low-income households in emerging countries where traditional banking networks are scarce.

 

But it has raised concern about the increasing dominance of big technology firms in mobile payments, which could force global policymakers to rethink the way they regulate the banking system and ensure financial settlements are executed safely.

 

"A significant disruption to the financial landscape is likely to come from the big tech firms, who will use their enormous customer bases and deep pockets to offer financial products based on big data and artificial intelligence," Lagarde told a symposium on financial technology held on the sidelines of the G20 finance leaders' meeting in Fukuoka, southern Japan.

 

While such innovation may help modernize financial markets, they could make the financial system vulnerable such by putting payment and settlement systems under the control of a handful of technology giants, she added.

 

"This presents a unique systemic challenge to financial stability and efficiency, and one I hope we can touch on during the G20, and address in a cooperative and consistent fashion."

 

Lagarde said China presents an example of the trade-off between benefits and challenges posed by financial technology.

 

"Over the last five years, technology growth in China has been extremely successful and allowed millions of new entrants to benefit from access to financial products and the creation of high-quality jobs," she said. "But it has also led to two firms controlling more than 90% of the mobile payments market."

 

Addressing the pros and cons of financial innovation is among topics of debate at the two-day meeting of Group of 20 finance ministers and central bank heads that began on Saturday.

 

(Reporting by Leika Kihara; Editing by Kim Coghill)

 

-- © Copyright Reuters 2019-06-09

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[Krataiboy]

. . . could force global policymakers to rethink the way they regulate the banking system

 

For "regulate" read manipulate. Anything that will make it harder for the elite corporate/financial oligarchy to engineer booms and busts is to be welcomed.

[topt]

1 hour ago, Krataiboy said:

. . . could force global policymakers to rethink the way they regulate the banking system

 

For "regulate" read manipulate. Anything that will make it harder for the elite corporate/financial oligarchy to engineer booms and busts is to be welcomed.

And of course the global technology giants are paragons of virtue.............

[roquefort]

2 hours ago, topt said:

And of course the global technology giants are paragons of virtue.............

Are you suggesting that governments and bankers who currently "regulate" the financial system are paragons of virtue.......?

[topt]

7 minutes ago, roquefort said:

Are you suggesting that governments and bankers who currently "regulate" the financial system are paragons of virtue.......?

No.

[Guest Jerry787]

getting out of World Bank or IMF debt traps ?

good news !

[connda]

Lagarde never noticed the vultures trying to place their systems mere feet closer to the core stock market computers in order to shave pico-seconds off of HFT orders?

Ahhh, what an immense joke.  Now worried about AI. <laughs> 

These people are all in the same club.  Ingenuousness abounds.

The melodrama, puppet plays, and locally wayang kulit is for the plebeians, the proletariat, the unwashed masses, the 'little people', the rice pickers. 

By the way, does Lagarde still not pay taxes being one of the premier leaders of the wold and not subject to such mundaness meant for only the peasantry?     

“Qu'ils mangent de la brioche”

 

Edited June 9, 2019 by connda

[CGW]

"Lagarde" there is a reason when I see her name I automatically think corrupt #itch, should be in jail, how to take anything this women says serious!