FinTech: From Systematic Risk to SupTech Application Initiatives. What are the obstacles for BRICS Countries?

Abstract

Digitalization has made us change the way we look at things, we can think of a new Industrial Revolution, which has given life to the digital economy, that is, a change in social and economic relations which has required, for some years now, to rethink the traditional approaches. The banking- financial world is no stranger to such changes as it finds itself facing radical situations of modernization, think of the transition from branches to ATMs and internet banking, innovations which have affected the economy by upsetting the economic, social and financial markets, leading consumer habits to change as quickly as possible to keep up. Fintech was first discussed in 2009, when traditional banks were facing an economic and financial crisis. The subprime mortgage crisis in the United States led to a decline in income and employment, forcing lenders to impose restrictions on bank credit to families and businesses. The fintech phenomenon distorts the economy, the banking and financial sectors, also changing the role of credit institutions and intermediaries, calling into question a system that has been well solidified to date. But what is actually meant by the term Fintech and what innovations does it bring to the banking and financial system? In practice, can the Fintech system be considered an asset or a threat to the economy? Are there innovations capable of overcoming the main risks that this new digital era entails? The arrival of this phenomenon is certainly not a surprise for the more modernized countries that manage to keep up almost effortlessly, but on the other hand we must also keep in mind those geographical areas that are developing and that are slowly emerging , so in this case, what would be the obstacles for developing countries considering these changes in banking and financial systems? This essay seeks to respond to all of this, providing a general picture of the Fintech phenomenon and a more detailed focus on the risks and innovations that can help us reduce the latter; finally analyzing the behavior of BRICS countries towards these new innovations. The first part of the thesis (chapter I) will be an introductory historical overview starting from the birth of the bank and its evolution, going through the transformation of payment methods that will lead to today's Fintech bank, analyzing the main financing methods that have given rise to this new prototype of banking and finance. The second chapter will propose an analysis of the main risk deriving from FinTech, i.e. "systematic risk", specifying its characteristics, methods of diffusion and concluding with the regulatory initiatives currently present in Italy and Europe. In the third chapter we will specifically analyze one of the emerging innovations to try to cope with systematic risk, covered in the previous chapter. We will therefore understand what the main SupTech Innovation tools are, the current application and the main legal and operational problems that could be encountered. To conclude (chapter IV) a general framework will be proposed on the BRICS countries and we will analyze how these emerging economies deal with the introduction of this new technology, trying to understand how the perspectives change between Western and Eastern countries. and what the main forms of supervision could be in this type of country.