The Need for Trust and Ethics in the Digital Age – Sunshine and Shadows in the FinTech World

Müller, János and Kerényi, Ádám (2019) The Need for Trust and Ethics in the Digital Age – Sunshine and Shadows in the FinTech World. FINANCIAL AND ECONOMIC REVIEW, 18 (4). pp. 5-34. ISSN 2415-9271

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Abstract

In the wake of the international financial crisis, digital financial and FinTech services have emerged as part of the fourth industrial revolution. These services, which are generally supported and welcomed by consumers, have now reached a stage where they are able to disrupt traditional financial structures. In the past, the role of FinTech startups was considered marginal and risk-free both by banks, which were busy restoring trust and optimising their operations, and by regulators and supervisors. However, as they have spread at a revolutionary pace, FinTech now entails several types of risk to financial stability and represents a serious threat. In order to address potential problems relating to financial stability, the need has emerged to regulate FinTech at the national and international levels, including the management of the body of data accumulated and used by FinTech companies. A situation has evolved in which three requirements should be met internationally and nationally: support for digital FinTech processes; a level playing field for incumbent banks and FinTech/BigTech companies; and the regulation of FinTechtype services at the international and national levels. Except for the first, these requirements have not been met to date, and expectations and codes of ethics and trust have gained prominence as workarounds. For that reason, the focus of our analysis is the importance of the requirements for trust and ethics in the banking sector, and the extent to which these requirements are enforced in the FinTech world. We present why it is becoming necessary to introduce codes of conduct, ethical standards and the exercise of due care in behaviour in order to build trust.

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