Banks and Financial Markets in a Digital Age Understanding the Future of Banking in an Increasingly Diffuse Financial System

This chapter reviews recent developments in banking as they pertain to the explosion of financial innovation, the emergence of Fintech, BigTech and BigData, and the blurring of boundaries between banks and markets, and what these portend for the future of banking. The key questions that are confronted in this chapter are: (1) what do these developments imply for banks as we know them? (2) what does the financial sector of the future look like? and (3) what are the public policy issues and regulatory challenges that have emerged and are likely to emerge in the future? The discussions in this chapter draw upon the rich insights developed in the extensive theoretical and empirical research in financial intermediation and capital markets, and raise many questions for future research.