Article Title

FinTech's Double Edges


This symposium essay examines the double-edged nature of financial technologies in financial transactions, especially transactions involving consumers. There are both benefits and risks—often undiscovered or hidden at first—in each new round of financial technologies. A FinTech tool may benefit consumers and then, applied later or in a different context, threaten consumer interests; a tool that harms consumer interests may then lead to development of a tool that favors them. This double-edged nature is an important but unappreciated structural feature of financial technologies. From the perspective of consumer protection, then, FinTech can neither be fully embraced as friend nor restricted as foe. Rather, it must be regulated with sensitivity to various competing goals: fostering innovation, policing abuse, and protecting access to markets, to financial services, and to the legal system. This essay cautiously endorses several strategies: the use of purposive and compliance-driven regulatory frameworks; regulatory “sandboxes” and other experimentalist and stakeholder-participatory approaches to FinTech governance; and the development of consumer-protective and consumer-enabling FinTech. It also calls attention the issues of distributive justice and equity that arise when there are prohibitive financial or cognitive barriers to effective use of FinTech; in other words, it calls attention to the fact that access to fair participation in the markets and access to justice may increasingly rely on access to FinTech.