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FinTech, BigTech and Cryptos – will new technology render banks obsolete?

Summary:
Norges Bank Deputy Governor Ida Wolden Bache in this speech: Not many years ago, it was inconceivable that Facebook would launch its own means of payment or that large international banks would offer cryptocurrency investments. The landscape is evolving quickly. The extent to which new solutions are adopted does not only depend on their features, but also on the alternatives. In Norway, banks have made great headway in terms of digitalisation. We have an efficient and secure payment system, and the value of the Norwegian krone commands trust and confidence. As such, I do not believe we are facing a fundamental transformation of the financial system in the near future. As long as the means of payment we use is based on Norwegian kroner, we will have money created by banks and payments

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Norges Bank Deputy Governor Ida Wolden Bache in this speech:

Not many years ago, it was inconceivable that Facebook would launch its own means of payment or that large international banks would offer cryptocurrency investments. The landscape is evolving quickly.

The extent to which new solutions are adopted does not only depend on their features, but also on the alternatives. In Norway, banks have made great headway in terms of digitalisation. We have an efficient and secure payment system, and the value of the Norwegian krone commands trust and confidence. As such, I do not believe we are facing a fundamental transformation of the financial system in the near future. As long as the means of payment we use is based on Norwegian kroner, we will have money created by banks and payments that must ultimately be settled by banks. Monetary policy will still have a channel into the wider economy, and even though banks may look different in the future than they do today, they will not become obsolete.

But we cannot sit still. Going forward, it will be even more important for banks to develop their services in pace with technological advances and the public’s wishes. And I can promise, on behalf of Norges Bank, that we will do our part to ensure that paying in Norwegian kroner will continue to be an attractive and safe alternative in the future. This is a task we do not take lightly.

Amol Agrawal
I am currently pursuing my PhD in economics. I have work-ex of nearly 10 years with most of those years spent figuring economic research in Mumbai’s financial sector.

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