Financial digitalization: Risk or opportunity

• Autor(a) principal: Esteves, Rui Manuel Ferreira
• Data de Publicação: 2021
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10071/24060
• topic: Digital innovation; Financial innovation; FinTech; Regulation; Inovação digital; Inovação financeira; Regulação

The growing technological development is giving rise to the digitalization of the economy, which spreads to all industries, including the financial industry, bringing with it risks and opportunities, and affecting all stakeholders. This change is accompanied by shifts in socio-economic thinking, collaboration between economic agents, thus joining the digital economy to the collaborative economy, including financial dematerialization and disintermediation. In an attempt to obtain a more quantitative analysis about the financial digitalization disruption in the various actors of the financial system, with a focus on Europe and investment, it was concluded that it is still relatively premature to have definitive conclusions about the risks and opportunities of the financial digitalization, however, some conclusions were reached, such as, a direct link between the prevalence of FinTechs and the low economic development in jurisdictions in Europe was not observed. Specialized clusters in areas of financial innovation have been found in some European countries, where regulation and legislation play important roles in this specialization. The most relevant financial areas in this disruption are in the following descending order, payments, investments and credit financing. Crypto-assets showed high volatility, and could not be considered as safe haven and store of value assets, including ‘stablecoins’, which proved not to be stable enough and fail to be faithful digital representations of traditional financial assets. This leads to the conclusion that they cannot yet be considered as substitutes for fiat currencies and other financial assets. Therefore, a conclusion must be drawn that investment in crypto-assets is highly speculative.