In a speech, the president and CEO of the Federal Reserve Bank of San Francisco discussed how financial technology can make the country’s financial system and the economy as a whole more successful at achieving its fundamental goals.

John C. Williams, President and CEO, San Francisco Fed, said that the most obvious and potentially most game-changing benefits of FinTech is the ability to reach historically underserved and economically disadvantaged communities.

“Fintech can lower costs and improve services, particularly for lower-income families and small businesses. Meaning fintech can help more people get access to credit at reasonable terms, better manage their finances, and keep more money in their pockets”, said Williams.

He further recommended leveraging big data and data analytics to improve operational efficiency, risk management and decision making.

However, turning focus on digital currencies such as bitcoin, Williams emphasized on their potential to be used for criminal and terrorist activities. He said:

“The other side of that coin, of course, is that, left unbridled, the ease and anonymity of some types of fintech, such as digital currencies, have the potential to make criminal and terrorist activity even easier. And while fintech could have significant benefits for the ability to assess and manage risk, any time we’re talking about big data, we need to be at least cognizant, and at most vigilant, about the protection and privacy of those consumers whose data are being used.”

In his concluding remarks, Williams noted that while FinTech can improve accessibility as well as quality of service, potential risks to the financial system and economy expand in proportion with the growth of fintech industry. To this end, he recommended establishing appropriate regulatory standards that protect consumers, while at the same time ensuring proper growth of the fintech sector.

“In summary, there’s no question that fintech is going to change the face of financial services on a global scale. I am excited for the changes to come, and I see the potency of the possible. But for fintech’s potential to be met, we need to make sure we don’t reinvent or exacerbate shortcomings that have plagued our financial system thus far. In that regard, well-designed regulation that protects consumers, fosters inclusionary rather than exclusionary practices, and enhances the fairness and resilience of the financial system should help rather than hinder fintech’s contribution to creating a better financial system and economy”, he concluded.