Financial Technology
and National Security
Elizabeth Rosenberg, Peter E. Harrell, Dr. Gary M. Shiman, and Sam Dorshimer
The fast-growing financial technology industry is claiming an increasingly important role in
the broader financial services domain, from payments to lending, clearing and settling, new
virtual assets and currencies, and beyond. These new financial technologies pose a range of
threats and opportunities to U.S. national security.
What is Financial Technology?
Financial technology is a broad term that describes an array of technologies applied
in the financial arena. It can encompass several decades of digital payment technology
evolution, from credit cards to early-version mobile phone payment applications, to more
contemporary peer-to-peer or bank-to-bank payment platforms, exchanges, and settlement
mechanisms. In cross-border payments, for example, financial technology developers
include longstanding incumbents such as SWIFT, as well as new companies exploring
blockchain-based settlement mechanisms and new transmitters.
Financial technology also describes decades of developments designed to increase eciency
and versatility, and decrease costs, in investing, trading, insurance, and compliance, among
other activities. More recently, there has been a speculative explosion in digital currencies
based on distributed ledger technology. Despite the initial bubble’s bursting in 2018, digital
currencies still had an overall market capitalization of more than $175 billion as of early May
2019, demonstrating that they are likely to remain part of the financial landscape.
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JUNE 2019
