The research focuses on FinTech that is the application of cutting-hedge digital technologies to improve financial activities.

In the last years, the FinTech industry steadily increased and quickly got the attention of a variety of international and European institutions. In particular, EU institutions (the European Commission, the Joint Committee of the European Supervisory Authorities, etc.) constantly addressed FinTech highlighting both its opportunities and threats for different interests, such as that of financial stability, consumer protection, financial innovation, etc. However, FinTech still lacks complete and consistent legal frameworks, being mainly an unregulated phenomenon. Both its newness and this lack of regulation encouraged centers of applied research, consultancy companies and the academia to contribute animatedly to the FinTech debate. For all these reasons, the research aims at studying FinTech, understanding the use of digital technologies in financial activities as well as its economic effects on all involved stakeholders and assessing which regulatory strategy best fits with it. More specifically, the research focuses on four different, yet interwoven technologies that are drastically re-shaping the current banking and financial background and enabling important new opportunities for financial players. Such "enabling technologies" are:

1. digital platforms;
2. big data;
3. cloud computing; 
4. automating algorithms and distributed ledger technology (DLT).

Digital platforms connect two or more sides enabling the creation of business models facilitating exchanges between two or more interdependent groups. Indeed, they are adopted by FinTech players to launch (equity and lending-based) crowdfunding. Thanks to cloud computing processing, digital platforms also enable companies to share computer processing resources and information with each other. So, they enhance collaboration between financial stakeholders while increasing efficiencies and economies of scale. The potential applications of cloud computing in financial services are different and payments is certainly one of the most affected areas. Big data is the enabling technology that allows the creation of extremely large datasets of varied data that can be computationally analyzed on a real-time basis to reveal patterns, trends and associations, especially those regarding human behavior and interactions. Big data reduces the costs of research while preserving accuracy of relevant information. For this reason, the areas of application of big data vary a lot and range from consumer profiling to risk assessment and fraud prevention. Algorithms are widely used in financial activities to automate many human-based processes. Their applications are transforming trading and financial consultancy and increasing efficiencies in credit scoring assessments. Moreover, algorithms are enabling the automation of many regulatory and supervisory processes, demonstrating the potentialities of regulatory technology (RegTech) and of supervisory technology (SupTech). Their adoption turns out to be even more effective in artificial intelligence (AI), whose subset of "machine learning" enables computers to learn from datasets analysis and illuminate both new invariants and patterns unfolding within financial markets on a (near-)real time basis. Distributed ledger technology (DLT) is a decentralized transaction and data management technology that leverages computer protocols to replicate the same ledger and update it without the need for a central responsible entity. Through DLT, all the participants of a same network can record information on the ledger and access it on a real-time basis. Combining cryptography, game theory and distributed consensus principles, DLT promises to offer a new solution to the never-ending human problem of trust. For this reason, DLT is expected to increase efficiencies in many financial areas, including payments and post-trade market infrastructures.

Thanks to the interdisciplinary expertise of the research units, the project aims at analyzing these four "enabling technologies" from a holistic point of view and assessing both their benefits and risks. The methodology of the research is expected to supply the units with important results that can lead to the opportunity of setting the grounds for a simple, cross-sectoral regulation. Properly balancing different interests, such regulation can help the correct development of FinTech and turn out to be extremely effective for increasing the financial inclusion of the European Small Medium Enterprises (SMEs).

Working group:

• Prof. Andrea Paolo Perrone - Faculty of Banking, Financial and Insurance Sciences 
• Prof. Pierpaolo Marano - Faculty of Banking, Financial and Insurance Sciences 
• Prof. Gianluca Mucciarone - Faculty of Banking, Financial and Insurance Sciences 
• Prof. Michele Mozzarelli - Faculty of Banking, Financial and Insurance Sciences
• Prof. Federico Rajola - Faculty of Economics
• Prof. Chiara Frigerio - Faculty of Language Sciences and Foreign Literature

Partners:

• Università Cattolica del Sacro Cuore - Italy (Coordinator)
• Università degli Studi di Milano - Italy
• Università degli Studi di Roma “Tor Vergata” - Italy
• Università degli Studi di Roma TRE - Italy