The Economist, talks about how new technology is chipping away at the traditional spaces occupied by the bankers. From savings, lending, financial planning to money transfers. A new breed, with speed and disintermediation that technology provides.
Bitcoin needs a special coverage. It goes to the ultimate level of creating a currency that is independent of Central Bankers.
Technology is dirupting the Central Bankers big time. There is more good than evil, as I see it. Central Bankers are loath to change and do not like challenges to their authority. Often, this comes in the way of a better way to do things. Technology that brings borrowers and lenders together, with minimal disintermediation and costs, speedily solves financial demand and supply, widens reach, etc are the way ahead.
As far as India is concerned, I see several challenges for Tech to invade the financial space. Our regulatory bodies are unlikely to grant approvals. That is the first hurdle. More important, India is a land of entrepreneurs. Unfortunately, ethics take a back seat. So, for every genuine venture in the tech space, there will be multiple ventures that are fradulent. Just take the travel websites. A handful of genuine ones and a host of fake ones. Or the cases like the NBFCs, Chit Funds, Cooperative Banks etc. Frauds are part of our occupational hazard. The inability of the regulator, combined with the retarded legal system that encourages white collar crime does not bode well for our future. Technology will bring its evil side to the fore in India.
As a participant, it pays to be choosy. Make your diligence checks. When in doubt, do not participate. A missed opportunity is better than losing your shirt.
However, I am not against technology replacing the antiquated set ups that we have. In fact, there is lot of room for innovation with several structures that can enhance returns for those with money and lower the costs for those who need. We need an umbrella legislation and a legislator. One big need is for punishment for the offendors. A separate court (which has powers of the Supreme Court) that is manned with people with hard core knowledge of financial markets is a pre requisite. The present RBI , SEBI are NOT suited.
Our regulators are not pro active but reactive. We need surveillance that is smart and speedy. If that can be ensured, technology can go a long way in making money smarter.