Answer to Question #300258 in Finance for Lukas

Question

With the continuous advancements taking place in the information technology (IT) sector, could 

these advancements cause financial intermediation to become extinct? Discuss.

Answer 1

These changes will necessitate financial intermediation to adapt. In essence , technological and social changes are inextricably linked. Consumers are becoming more accepting of digital banking. Consider new ideas like online video consulting services, digital credit broking, and social media integration into banking. Banking is still a "people business," but it is no longer limited to close, personal ties. As a result, there is a lot of demand for digital banking's developing technologies: low-cost, quick-to-implement processes, solutions for complex financial challenges, and service suited to clients' specific demands.

In a nutshell, financial institutions will not vanish. Banking institutions may have a pre-digital DNA, but they can learn, adjust to a digital context, and collaborate with technological innovators . The banking industry is as important as it has ever been. Entrepreneurial abilities will continue to be critical to business success. Banking will continue to support the real economy in an increasingly digital finance industry. Banking, on the other hand, is founded on trust. Therefore, it will be critical to keep this in mind in order to ensure a robust and stable financial sector.