Implications to BNM as a regulator These scenarios I have painted are drawn to show the distinct characteristics of a financial sector across four possible scenarios. It could be one of them, a combination or none of the above. Regardless of which scenario might eventually emerge, perhaps the most important realisation for stakeholders today is to be aware, ready and prepared for all the scenarios. In reality, what is even more likely though, is that the dynamic interplay between these scenarios will end up shaping the future of finance in ways that we cannot even fathom today. Interestingly, we are already seeing some elements of all four scenarios in our financial system today. To my mind, scenarios one and four are remotely possible, while scenarios two and three are considerably probable. For regulators, as the four scenarios highlighted, it is not beyond the realm of possibility that banks, in its current form, might no longer exist. This phenomenon not only negates the main intermediation channel of central banks’ monetary policy, it will also challenge central banks in terms of rethinking the means to regulate, supervise and safeguard overall financial stability and the manner in which scarce economic resources are allocated and intermediated. As data becomes the driving force of financial services, the central bank must keep abreast with 4/5  BIS central bankers' speeches  the latest thinking to harness the power of big data.
Fintech startups leverage on banks for regulatory compliance and access to customer base, while banks allow them to ‘plug-into’ their business as a swift means of acquiring technology; c. This collaborative model is made possible by the application of new technologies such as distributed ledger and open API across a wide range of financial services; d. Consumers and businesses will have access to highly competitive and efficient financial 3/5  BIS central bankers' speeches  services, driven by both scale and adoption of technological innovations; and e. In this scenario, greater financial education and literacy is important to ensure that the benefits of technology and innovation in the financial sector are fully realised. The third scenario is “New Kids on the Block” a. In this scenario, both technology adoption by incumbent banks and fragmentation among finance providers are relatively low; b. Consumers continue to accord a premium to regulated institutions and the existing idea of financial services being offered by a bank; c. Factors such as security, privacy and reliability remain at the forefront of the value proposition of traditional banks.