We Asked a Nobel Prize-Winning Economist How to Fix Fintech
Myron Scholes, who won the prestigious award in 1997, has been thinking deeply about trust in the world of finance for decades.
Nobel Laureate Myron Scholes has been thinking deeply on the subject of trust for decades.
Photographer: Patrick Fallon/Bloomberg
Financial services, like many institutions, are losing Americans’ trust. That’s a problem. Economies depend on a healthy financial system, as became painfully evident during the 2008 financial crisis, and that system operates largely on trust — confidence that people can access the money in their bank accounts, that their investment accounts are secure, and that their trades will be filled at quoted market prices, to name just a few everyday financial interactions.
But building confidence in financial services is tricky. Financial systems are technical and complex and therefore somewhat opaque, and that opacity erodes trust. Financial technology from online trading and blockchain to mobile payments and banking has the potential to make financial services more transparent and trustworthy, but it’s not yet clear if, or to what extent, those innovations are making a difference.