Economic frictions such as information asymmetries and economic forces such aseconomies of scale and scope give rise to financial intermediaries. These frictions andforces also shape market structure. While technological advances are not new tofinance, digital innovation has brought major improvements in connectivity ofsystems, in computing power and cost, and in newly created and usable data. Theseimprovements have alleviated transaction costs and given rise to new businessmodels and new entrants. As technology has increased information exchange andreduced transaction costs, the production of financial services could bedisaggregated. Specialized players have unbundled financial services, allowingconsumers to find and assemble their preferred suites of products. However, classiceconomic forces remain relevant even in an age of digital production. Economies ofscale and scope and network effects are present in many aspects of financial servicesproduction, including customer acquisition, funding, compliance activities, data andcapital (including trust capital). Despite advances in technology, consumer search andassembly costs remain significant. These forces encourage re-bundling, and conferadvantages to large multi-product providers, including technology (big tech) firmsexpanding into financial services from adjacent markets. The digital transformation offinancial services gives rise to a set of important policy issues regarding competition,regulatory perimeters and ensuring a level playing field. Potential outcomesregarding competition, concentration and market composition include a “barbell”outcome composed of a few large providers and many niche players. Authorities mustcoordinate across financial regulation, competition, and industry regulatory bodies tomanage trade-offs between stability and integrity, competition and efficiency,