Data Driven Futures

Fintech’s could shake financial stability

Written by Mark Evans

Technological risks rose through the rankings of this year’s Depository Trust & Clearing Corporation (DTCC), risks to the financial sector in 2018.

More than a third (36 per cent) of survey respondents view cyber risk as the number one threat to the broader economy in 2018, with one respondent saying that “firms are making investments in safeguarding system access and part of that investment is the consideration of cyber insurance with their portfolio of risk mitigation strategies.”

Fintech risk, was acknowledged as a significant source of risk by 15 per cent of respondents. As one respondent said, “The evolution of fintech has outpaced the ability of the financial services industry to adapt to such rapid changes. The risks potentially posed by fintech could have substantial impacts on the financial services industry and regulators will need to enhance their oversight capabilities for this emerging area.”

None-the-less geopolitical uncertainties in Asia have positioned geopolitical risk as a top risk to watch in 2018, which, given the interesting nature of recent elections, tensions and public reaction is hardly a surprise.

However, looking ahead, a majority of respondents do not believe a destabilising event will occur in 2018. However, they project a continued increase in spending over the next twelve months on identifying, monitoring and mitigating systemic risks, a continuation of the trend from previous surveys.

The DTCC has conducted Systemic Risk Barometer Surveys across the global financial services industry on a semi-annual basis since 2013. The most recent survey was completed in Q3 2017.