As banks’ role has somewhat shrunk, non-bank financial intermediaries have taken on an increasing role in the global financial system.1 At the same time, advances in technology have fuelled the emergence of technologyenabled financial innovation (“FinTech”), which is one of the areas where non-bank finance is expanding most rapidly.
A diversified financial system benefits savers and borrowers because it offers multiple ways of channelling financial resources, including to support long-term investment, and diversifying risks. The non-bank financial sector competes with banks, thereby stimulating efficiency and innovation. It can reduce the vulnerability of the real economy to financial shocks because funding sources for the real economy can be diversified.