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Speech by Governor Brainard on the opportunities and challenges of fintech

December 02, 2016 / Source: FRB

The Opportunities and Challenges of Fintech
On behalf of the Board of Governors, I would like to welcome you to our conference on emerging financial technologies, or fintech. I'd like to begin by remembering our Federal Reserve colleague Teresa Curran—executive vice president and director of Supervision at the Federal Reserve Bank of San Francisco—who recently passed away after a long illness. Teresa's leadership on fintech was one of her many extraordinary contributions to the System. With her characteristic enthusiasm, Teresa helped us prioritize this topic early on and had a strong influence in helping shape our work program—with an emphasis on assessing the opportunities and challenges of fintech in a balanced way. We already miss her wise counsel here. I'm sure Teresa would have appreciated this conference's gathering of academics, industry participants, and policymakers to exchange information and discuss current research related to financial innovation.
Why Is Fintech Important?
In my remarks today, I'd like to share a few thoughts about emerging financial technologies and their relevance to our work.1 Fintech has the potential to transform the way that financial services are delivered and designed as well as the underlying processes of payments, clearing, and settlement.2 The past few years have seen a proliferation of new digitally enabled financial products and services, in addition to new processes and platforms. Just as smartphones revolutionized the way in which we interact with one another to communicate and share information, fintech may impact nearly every aspect of how we interact with each other financially, from payments and credit to savings and financial planning. In our continuously connected, on-demand world, consumers, businesses, and financial institutions are all eager to find new ways to engage in financial transactions that are more convenient, timely, secure, and efficient.
In many cases, fintech puts financial change at consumers' fingertips—literally. Today's consumers, particularly millennials, are accustomed to having a wide range of applications, options, and information immediately accessible to them. Almost every type of consumer transaction—ordering groceries, downloading a movie, buying furniture, or arranging childcare, to name a few—can be done on a mobile device, and there are often multiple different applications that consumers can choose for each of these tasks based on their preferences. It seems inevitable for this kind of convenience, immediacy, and customization to extend to financial services. Indeed, according to the Federal Reserve Board's most recent survey of mobile financial services, fully two-thirds of consumers between the ages of 18 and 29 having a mobile phone and a bank account use mobile banking.3

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