The rapid evolution of FinTech with its multiple applications and interactions within the financial services sector, ranging from front-end to back-end operations, may fundamentally change the risk profiles of institutions by creating new risks and/or amplifying some existing risks, prompting institutions to review their risk management frameworks and strategies. While at first sight ICT risks could be perceived to be the key risks associated with the emergence of FinTech, this report identifies and analyzes the wider prudential risks and opportunities that may arise in institutions from the use of innovative technologies.
This report aims to raise awareness, within the supervisory community and the industry, of current and potential FinTech applications, striving to provide a balanced analysis of associated potential prudential risks and opportunities that may arise. The intention of this report is merely to inform and share information without making recommendations to competent authorities or institutions. It is focused on microprudential aspects and is envisaged to provide both the competent authorities and institutions with useful guidance on such applications. Specifically, the seven use cases selected for analysis in this report discuss the application of FinTech to existing financial processes, procedures and services.
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