Therefore, regulators expect that the nature of partnership between traditional banks and the new fintech players to evolve into a symbiotic one, and not necessarily an adversarial one. This could create a win-win outcome for all the stakeholders, but one challenge that may arise is that of proxy disintermediation, with the attendant risks of financial activities taking place outside the regulatory perimeter.
For example, in the United States the shadow banking system is about 175% the size of the regular banking system, whilst the ratio in Germany is only around 25%. As well as the size of the shadow banking system, its rate of growth also varies between regions.