Recommended articles: FinTech and Advanced Analytics

1. The future of operational-risk management in financial services. Advanced analytics has applications in all, or nearly all, areas of operational risk. It is creating significant improvements in detecting operational risks, revealing risks more quickly, and reducing false positives. Whether in information security, data, compliance, technology and systems, process failure, or even personal security and other human-factor risks, the advanced-analytics advantage is becoming increasingly evident. Some applications are described below (McKinsey).

2. Artificial intelligence will play an increasing role in wealth management. The use of AI risks replicating the over-reliance on quantitative techniques that led to the 2008 crisis (LSE Business Review).

3. Managing the winds of change: policy responses to fintech. Technological innovations in financial services are affecting every sector of the financial industry and generating a surge of new applications. This column takes stock of the policy responses to fintech developments in approximately 30 jurisdictions worldwide and proposes a novel conceptual framework – the ‘fintech tree’ – that distinguishes three categories: fintech activities, enabling technologies, and policy enablers. Designing a policy framework for fintech will require finding a balance that maximises its benefits while minimising potential risks to the financial system (VoxEU).

4. Payment aspects of financial inclusion in the fintech era. This report reiterates and enhances the guidance developed in the report on Payment aspects of financial inclusion (PAFI) issued by the Committee on Payments and Market Infrastructures and the World Bank Group in 2016. Since then, the PAFI framework has been adopted as the analytical underpinning for designing and implementing country-level actions and global efforts to improve access to and usage of transaction accounts. The PAFI guidance seeks to advance financial inclusion through payments. Stakeholders aiming to leverage the fintech potential in a responsible way for achieving the PAFI objectives can take further actions that seek to harness the potential of fintech, while mitigating its accompanying risks. The report sets out fintech-focused key actions, and places them in the context of the overall PAFI guidance, which was formulated in a technology-neutral and holistic way, and continues to be relevant in the era of fintech (BIS).