This dimension includes both e-trading platforms that allow consumers to invest directly through its computer on all sort of assets, and FinTech innovations that offer automated advice on financial services (robo-advisors), including investment and portfolio management. 3  IAIS (2016), “FinTech Developments in the Insurance Industry”, February 2017. 9  Central Bank of Chile 29 June, 2017  Slide 13  Opportunities ▪ Blockchain/Distributed Ledger Technology (DLT): efficiency of financial payments ▪ Real time order-settlement-payment—operational and counterparty risk ▪ The benefits for financial stability may include: i. ii. iii. iv. Increased market efficiency Enhanced risk measurement Lower trade costs, robustness against cyber-attacks, and less need for collateral Stronger wealth-channel for monetary policy  ▪ Crowdfunding and P2P may reduce systemic risk—an affordable alternative ▪ FinTech market support tools can also contribute to financial stability  Opportunities [SLIDE 13] Blockchain/Distributed Ledger Technology (DLT) can enhance the efficiency of financial payments systems as all operations are jointly kept by all members of the network and all the processes of order-settlement-payment are implemented in real time. This compares with a current situation where most settlement processes take 2 or 3 days to execute, creating operational and counterparty risk.
11  Central Bank of Chile 29 June, 2017  Slide 15  Potential for financial development ▪ DLT may contribute for the development of emerging countries in several aspects: i. ii. iii. iv. v.  Universal access to financial services by consumers and small-medium enterprises Enhanced security of remittances and transactions among vulnerable sectors Higher competition and less concentration of the financial sector Reduced costs for participation in the formal economy Easier access to public services based on improved government databases  Potential for financial development [SLIDE 15] DLT may contribute for the development of emerging countries in several aspects: (i) universal access to financial services by consumers and small-medium enterprises; (ii) enhanced security of remittances and transactions among vulnerable sectors (the poor, migrants, rural areas); (iii) higher competition and less concentration of the financial sector, and (iv) reduced costs for participation in the formal economy and easier access to public services based on improved government databases. Recent experiences with M-Pesa in Africa and with Unique ID in India are good examples of such development trends. However, some obstacles and risks still deserve attention. An efficient use of financial services may require larger investments in education and financial literacy. Recent experience shows that even in developed countries people often misuse financial instruments. Consumers often suffer from large debt burdens and complex contracts that they do not understand. Also, some of the new financial instruments—such as digital currencies—may facilitate tax evasion, fraud and illegal transactions.