The Role of Financial Technologies in the Development of New Financial Instruments and Markets

Abstract

Financial technologies have significantly influenced the structure of financial markets and instruments used in the modern high-tech environment. The article aimed to outline the impact and significance of financial technologies in shaping new financial instruments and markets. The research methodology included general scientific methods of analysis (statistical and structural), synthesis, induction, and deduction, as well as case study techniques to assess the role of financial technologies in the development of the financial technology sector and digital banking. The results demonstrate a substantial contribution of financial technologies to digitizing financial markets and instruments. Financial innovations and technologies serve as new structural elements of the financial sector. They are implemented in the following forms: new products (such as new types of securities); new technologies (such as credit scoring, ATMs); new institutions (such as venture capitalists, mutual investment funds, fintech startups/unicorns, and financial service providers). Digitization has led to the development of new forms of the following services: banking activities (neo-banking, virtual banking, and digital banking); products and financial instruments (digital currencies, electronic money, digital payments); tools for providing financial services (marketplaces, digital platforms, mobile applications, Internet banking based on websites). On the one hand, financial innovations create regulatory issues and systemic risks. However, their potential ensures cost reduction in the financial sector, scalability, expansion of activities beyond national markets, increased profitability, as well as more convenient and user-friendly services.