How new technologies influence the development of the financial market
The emergence and development of technologies such as blockchain and artificial intelligence will, in the very near future, lead to dramatic changes in the basic functioning of the traditional financial system. What new things can these technologies bring to the conservative financial world? Let us formulate two main advantages that these technologies bring to the financial sector.
The first is the ability to store any amount of data in a distributed, confidential manner, for example, account balances, credit histories of borrowers, etc. The point is that such data storage will be shared among all market participants (borrowers, depositors, and investors), not among one system participant (bank, stock exchange, or investment company) as it works today.
Secondly, it is the ability to automatically process and analyse large volumes of data and quickly get accurate answers to almost any questions, for example, whether to lend or not to lend to the borrower? And if it is granted, what percentage can be offered?
You must have already asked yourself the question: will we need, for example, banks in the future if everything concerning payments and loans will be stored by financial market participants, and the decision to grant credit will be made by artificial intelligence? The question is absolutely right and the answer is: banks will be needed, but with a changed financial business model. Let’s call them intermediary banks. And the existing model, where a bank attracts deposits and makes loans on their account, we will call the classical banking model.
The difference between the intermediary bank model and the classic bank model