Over the past year, I have come across several cases where the forces of financial democratisation are redefining the outer edges of the financial service industry. Enabled by disruptive technologies and post-crisis mindsets, they also have the potential to improve the broader intermediation process that brings together sources and uses of productive capital. It is part of a broader phenomenon that has dominated the technology sector and is playing out in media and elsewhere. It is one that requires adjustments on the part of traditional institutions and the authorities that regulate them.

The democratisation of finance comes in many forms. A notable one is the use of “peer-to-peer” and direct lending platforms to bypass costly intermediaries. These link borrowers and lenders in cost efficient ways. and are among the changes that are reshaping interactions and empowering individuals. Driven by the digital revolution, the y encourage entrants with greater cognitive diversity, including a tilt in favour of technological disruption.

No wonder more tech entrepreneurs are taking an interest in the financial sector, which cries out for disruption given its slow adoption of technologies, its profitability, and the difficulties it has had in enabling superior client outcomes. Outside forces also play a role. Banks still face a trust deficit. Regulators, prompted by consumer protection approaches, favour the delivery of financial services that are better aligned with client success.