Fintech could help reduce prejudice in credit allocation, but may also undermine the effectiveness of existing regulations, a new Bank for International Settlements working paper finds.

Thomas Philippon investigates potential efficiency gains from fintech and how they are likely to be shared. He finds there is evidence that fintech firms can allocate credit more efficiently, as the “unit cost of financial intermediation” has declined over the past 10 years.

The use of big data to underpin