The FinTech Opportunity Thomas Philippon

I argue that the FinTech movement offers a unique opportunity to reshape the finance industry by improving its efficiency and its stability. Seizing this opportunity, however, requires a new approach to financial regulation. I first show that financial services remain surprisingly expensive, which explains the emergence of FinTech firms.I then argue that our current regulatory approach is fast approaching its limits in terms of political economy and coordination costs. Finally, I explain how new technologies can bring significant benefits in terms of financial stability and access to services, but this requires a shift in regulatory focus from incumbents to entrants. I outline a set of principles that could be used to guide these new regulations.