Blockchain, Fintech, and Competition: Is Blockchain the Next Coordination Device in the Banking Sector?

A blockchain is a decentralized, distributed, public digital ledger that is used to record transactions between members of a network. The widespread adoption of blockchain in the banking industry offers advantages but also poses risks relative to their anti-competitive impact on financial markets.

On the one hand, blockchain will improve transparency and traceability of financial products to be exchanged, thereby undermining the need for intermediaries. On the other hand, blockchain could prove helpful to create or facilitate coordination among competing banks. This is because, by increasing market transparency, blockchain could help competing banks to establish coordination, monitor adherence to coordinated behavior, and (to a certain extent) effectively punish deviations.

For these reasons, the adoption of blockchain technology should go with the identification of safe harbors when dealing with information made public on a blockchain.

In this article, written for Concurrences Review by experts Miguel de la Mano and Guillaume Duquesne from Compass Lexecon, and Karthik Balisagar from FTI Consulting, the authors discuss the disruptive impact of blockchain technology on competition in financial markets.

Download the article, first published on the Concurrences Review website.