Financial digitalization: Trends, opportunities and risks

Abstract

During the last decade, we have observed a reinforcing trend of declining share of traditional banks in financial intermediation. One of the causes of this development is the process of digitization of the financial industry. In the financial sector, or better said, beside it, virtually new industry of FinTech has developed. This development brings several significant opportunities and risks in many aspects, especially in areas such as consumer satisfaction, effectiveness of financial intermediation, the effectiveness of monetary policy, or in the broader context of financial stability. In this article, we present a liturature overview on the topic and formulate the most significant opportunities and risks of ongoing innovations in the financial sector, with a special focus on digitization and the FinTech sector.