And this is why supervisors are now taking leverage ratios into account when assessing institutional risk, in addition to the standard risk-weighted ratios. This allows for a multiangled view of institutions’ risk profiles. Other rules, such as limits on LTV ratios, may set clear limits on loan portfolios’ risk profiles.
By responding to consumer needs for security, trust, privacy and lower cost services, the FinTech industry is poised to affect an array of financial services in a big way. More widely, I believe that FinTech has the potential to enhance financial inclusion and unlocking SMEs and microenterprise’ access to financing.