Large, incumbent institutions and newer entrants have each invested massively in developing new technologies to deliver financial services. These tools are now shaping how services are being provided around the world - and potentially enabling greater inclusion and efficiency, while creating new risks and questions about proper governance.
The growing prevalence of non-bank financial intermediaries has become a risk area risk they represent could trigger significant shocks during a period of distress - which could in turn be compounded if financial institutions trade in a manner that is similar to one another.
Alternative providers of capital, new regulations and automation are changing the financial sector. As banks grapple with an evolving regulatory environment, a new breed of alternative providers of capital has emerged: so-called shadow banks, which function as intermediaries but are not necessarily regulated. They challenge traditional financing models, while incurring relatively lower costs than traditional banks. They also pose greater risk to general financial stability.