Financial Regulation and Technological Innovations – an Indisputable Commitment or Danger of Overconfidence?

Abstract

The ongoing digital transformation of the financial sector has significantly altered not only the financial services themselves, but also the landscape of financial regulation and supervision. This article explores the dual dimensions of technological innovations used for compliance and supervisory purposes in finance. It argues that while such developments offer efficiency and scalability, they also introduce new operational vulnerabilities that may exceed traditional financial risks in complexity and impact. The paper avoids specific regulatory case studies, focusing instead on particular conceptual points of emerging interdependencies and the potential risk of overconfidence in high-tech compliance mechanisms. It concludes by emphasizing the need for a balanced approach that fosters innovation while ensuring resilient, adaptive regulatory safeguards.