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    The impact of financial technology on the transformation of the financial system
    (Харківський навчально-науковий інститут "Університет банківської справи", 2018) Shkodina, Iryna V.; Timoshenkov, Igor V.; Nashchekina, O. N.
    Based on our analysis of trends and threats associated with the use of financial technology, we conclude that its implementation increases the complexity of the institutional structure of the financial system. Certain institutional factors earlier regarded by scholars as anomalies that had either none or an insignificant effect on the development of the financial system are now emerging. These factors are becoming increasingly fundamental, and are in fact transforming the financial system. As the result, the established functional relations fail, while new institutions and new interdependences emerge, which leads to certain unforeseen destabilizing consequences. The spontaneity of the process of systemic transformation determines human behavior, that is why it is not always possible to clearly anticipate the outcomes of such transformation. Financial innovations are more difficult to regulate because there are no formal rules established for most of them, and they themselves are so novel that they fall outside the control of regulatory authorities. We believe that in order to prevent potentially adverse effects, it is necessary to strengthen the cooperation between government agencies and financial technology companies for the purpose of developing formal rules and procedures for ensuring the reliability and the security of the financial sector. It is important to work towards increasing the degree of trust and to establish a culture of innovation which would help the participants of financial markets adapt to the rapidly changing financial environment.