SEMINAR REPORT
Moderator: Elizabeth Schulze, Technology Correspondent, CNBC International
Opening Remarks: David Lipton, First Deputy Managing Director, International Monetary Fund
Speakers:
Mark Carney, Governor of the Bank of England
Jason Furman, Professor of the Practice of Economic Policy at Harvard Kennedy School
David Marcus, Head of Calibra
Nandan Nilekani, Co-Founder and Chairman of Infosys Technologies Limited
The entry of large technology firms, “Big Tech”, into financial services could deliver significant efficiency gains and enhance financial inclusion. At the same time, regulators need to consider and mitigate the risks that may come with such new entrants. Panelists discussed the complex trade-offs, including financial stability and inclusion, competition, and data protection.
Key Points:
Benefits of Fintech. Panelists agreed that the current financial system needed to evolve. They highlighted that financial service consumers, across both developing and advanced economies, face significant costs and inefficiencies, as well as other limitations to accessing finance. Marcus stated that at present 1.7 billion did not have access to digital finance. Commenting on the experience in India with national digital financial inclusion programs, Nilekani noted that such programs had enabled the creation of 330 million new accounts over a short time period.
Role of Big Tech. Panelists recognized the potential role of Big Tech in driving important change in the financial services industry, including through its ability to scale basic financial services at a low cost. Carney noted that global digital currencies, like the proposed Libra, may assist in de-dollarizing the global financial system, while also recognizing the potential volatility that could be created for domestic currencies. Panelists also noted the risks that new entrants may bring, including reduced competition, given Big Tech’s already established large customer bases, as well as financial stability, consumer protection, and data privacy concerns.
Policies. Panelists emphasized the need to ensure that consumers could fully benefit from the technologies, including through the interoperability of Big Tech financial services. In particular, Furman noted it was important that policymakers take action to avoid the build-of market concentration. Carney stated that it was imperative for central banks to play a central role in the digital financial system, while keeping up with innovations. In his opening remarks, Lipton highlighted the Bail Fintech Agenda and Fund’s efforts in assisting policymakers in thinking through the challenges and opportunities of fintech.
Quotes:
“We see the IMF as a point of convergence, a place to exchange experiences and points of view on the issue of Big Tech and Finance.” David Lipton
“We used to pay a US dollar a minute for an international phone call. With the internet, it’s free today…. when you think about money, it hasn’t evolved the same way.” David Marcus
“We have to look at how we use data to empower people… that data be put in the hands of the users for their own benefit.” Nandan Nilekani
“We need to look at the whole financial ecosystem, because everything is interconnected. A central bank’s job is to ensure financial stability. We also want to enable innovation.” Mark Carney
Contributor: Alex Lalor
