2. Fin Tech Innovation and the Disruption of the Global Financial System

In this chapter, a more structured analysis of the wave of financial innovation—driven mainly by digitization and new technologies—but also by shadow banking players acting just outside the boundaries of regulations, is presented as it applies and impacts on the industry of financial services—with a number of potential disruptors acting across the value chain and with a different set of competitive advantages. The discussion develops therefore on the topic of the potential changes impacting across the main fundamental functions of the global financial system—from payments to lending, from investment banking to insurance and so on. A number of potential taxonomies of emerging winners are introduced and a discussion is developed on the potential strategies that could be adopted by incumbents—that could either fall victim of the innovation, or reap most of its benefits, embracing this wholeheartedly and considering also alliances with new digital players. All of this is also considered as the potential engine of the many restructuring and resolution cases that could happen because of the inability (or outright unwillingness) of some of the incumbent players to change and adapt.