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Market developments based on digital technologies
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Lorenzo MORETTI, Laura RINALDI and Pierre SCHLOSSER (eds), Digital finance in the EU : navigating new technological trends and the AI revolution, Florence : European University Institute, 2024, pp. 12-34
[Florence School of Banking and Finance]; EU Supervisory Digital Finance Academy (EU-SDFA)
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LAURIDSEN, Nico, PASSOS PECANHA VIEIRA, Nikolas, Market developments based on digital technologies, in Lorenzo MORETTI, Laura RINALDI and Pierre SCHLOSSER (eds), Digital finance in the EU : navigating new technological trends and the AI revolution, Florence : European University Institute, 2024, pp. 12-34, [Florence School of Banking and Finance], EU Supervisory Digital Finance Academy (EU-SDFA) - https://hdl.handle.net/1814/77928
Abstract
This chapter aims to provide an overview of the recent trajectory of the FinTech market by identifying and critically examining the crucial factors that have shaped its evolution at the global and European levels. Particular attention is given to technological advances and the implementation of new regulatory frameworks, both of which have been instrumental in driving innovation in the sector (Financial Stability Board, 2019; Boot et al., 2021; Beck at al., 2022). The chapter explores two main aspects of FinTech growth. First, it covers the increase in market participants and the growing volume of financial transactions due to improved access to funding. Second, it analyses the ongoing consolidation of the industry driven by recent macroeconomic shifts and considers the broader implications for market structure and competition (Propson et al., 2024). By focusing on these two areas, the chapter aims to provide a descriptive analysis of how the market is responding to current global challenges such as geopolitical risks and inflation. It also explores the policy considerations surrounding the adoption and enforcement of new regulatory frameworks in the realm of digital finance. Indeed, the evolution of the FinTech market has taken place in a historical moment of favourable macro conditions and non-dedicated regulatory regimes. To discuss the outlook for the FinTech market and its development it is essential to analyse current shifts in global trends. The analysis of market trends considers a time horizon of five years, both prior to and following the present. This approach is necessary due to the high volatility of the macroeconomic environment, which complicates discussion of potential implications for market structure in the medium to long term.