Kiffmeister’s #Fintech Daily Digest (08/11/2020)

Following OCC Letter, Some US Banks Appear Open to Providing Crypto Services

Multiple US national banks responded to the Office of the Comptroller of the Currency’s (OCC’s) June “Advance Notice of Proposed Rulemaking” (ANPR), which asked the general public to weigh in before Augist 3. on how crypto-assets and other fintech tools might be used in the financial sector. Several banks, including U.S. Bank and PNC, indicated they might be interested in actually providing crypto custody and other services to customers.   

Filling the Gap: Digital Credit and Financial Inclusion

This IMF paper focuses on marketplace lending using data for 109 countries from 2015 to 2017 to study the relationship between fintech credit to businesses and consumers and various aspects of financial development. Marketplace lending to consumers grows in countries where financial depth declines highlighting the role of fintech credit in filling the credit gap by traditional lenders. This result is particularly strong in low-income countries. In the business segment, marketplace lending expands where financial efficiency declines. The paper’s findings show that low-income countries take advantage of the fintech credit opportunity in the consumer segment but face important challenges in the business segment. 

Financial Intermediation and Technology: What’s Old, What’s New?

This IMF paper studies the effects of technological change on financial intermediation, distinguishing between innovations in information (data collection and processing) and communication (relationships and distribution). Both follow historic trends towards an increased use of hard information and less in-person interaction, which are accelerating rapidly. It points to more recent innovations, such as the combination of data abundance and artificial intelligence, and the rise of digital platforms. It argues that in particular the rise of new communication channels can lead to the vertical and horizontal disintegration of the traditional bank business model. Specialized providers of financial services can chip away activities that do not rely on access to balance sheets, while platforms can interject themselves between banks and customers. 

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