IMF Warns Banking Sector Of Major Fintech Companies Growing Competition
According to a new study published by the International Monetary Fund (IMF), banks should accelerate the development progress of innovations, otherwise, they risk being left behind. There are many major technology companies that are constantly looking for solutions to improve the financial system in modern age.
A report published on Monday titled “The Rise of Digital Money” states that the two most common forms of money, such as cash and bank deposits, will run against difficulties. Besides the fintech giants may push them into the background.
Despite the pressure from major technology companies and fintech startups, banks are unlikely to disappear.
Some will be left behind no doubt. Others will evolve, but must do so quickly, the document says.
At the same time, the authors of the study state that banks have several advantages over fintech companies. The main ones are raising the deposit rate. But fintech companies are more versatile than old school banking systems. This allows companies to quickly respond to new use cases and test them. Fintech companies can not only provide people with more convenient settlement solutions but also get the major part of customers who need it.
Regulators Wary Look At Innovative Fintech Solutions
The study was published as fintech companies and digital currencies are starting to influence the banking and payment systems.
US Treasury Secretary Steven Mnuchin devoted a small part of his speech to digital assets - Bitcoin and Libra in a briefing for reporters at White House.
The crypto allegedly "is indeed a national security issue." Mnuchin admitted that the launch of the Libra project was not the best news for him. The US Treasury Secretary did not have a significant impact on the market. But Donald Trump's tweet a few days earlier served as a slight push for the price of Bitcoin. Against the background of his post, the rate of cryptocurrency rose slightly.
I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity....
— Donald J. Trump (@realDonaldTrump) July 12, 2019
Congressional pressure on Libra project is growing. Authorities believe that the Facebook project is supposed to become the “fuel” for the illegal activity of fraudsters. Yesterday, the company went through a regular hearing of the US Senate Banking Committee, and today Facebook is responsible for the US House Committee of Financial Services.
The company executives state that they expect such a thing at the initial stage of project launch from the government. That is why the announcement of Libra project took place a year before the official launch of the coin. Facebook wants to determine all disputes over this period.