The stability of bank funding is not assured in an approaching era of fintech disruption of banking, warned Mark Carney, the head of the Financial Stability board, on Wednesday.FinTech's "promise springs from its potential to unbundle banking into its core functions," Carney said, listing these as "settling payments, performing maturity transformation, sharing risk and allocating capital."Carney, who is also governor of the Bank of England, canvassed the orthodox outline of fintech's rise. "This possibility is being driven by new entrants - payment service providers, aggregators and robo-advisors, peer-to-peer lenders, and innovative trading platforms. And it is being influenced by incumbents who are adopting new technologies in an effort to reinforce the economies of scale and scope of their business models."Carney shifted into cautionary mode."In this process, systemic risks will evolve. "Changes to customer loyalties could influence the stability of bank funding. New underwriting models could impact credit quality and even macroeconomic dynamics. "New investing and risk management paradigms could affect market functioning. "A host of applications and new infrastructure could reduce costs, probably improve capital efficiency and possibly create new critical economic functions."?The challenge for policymakers, Carney said, was to "ensure that fintech develops in a way that maximises the opportunities and minimises the risks for society. "After all, the history of financial innovation is littered with examples that led to early booms, growing unintended consequences, and eventual busts."Carney spelled out some of the concerns held by the FSB."If today's universal banks lose their [customer] loyalty and instead have less stable funding and weaker, more arms-length client relationships, the volatility of their deposits and liquidity risk could increase. "In addition, with weaker customer ties, cross-selling could be less prevalent, hitting profitability. The system as a whole wouldn't necessarily be riskier, but prudential standards and resolution regimes for banks may need to be adjusted."Marketplace lending, Carney said, was building a "diversity in funding" and fostering loans to business that may never have secured credit from a bank."At the same time, this implies that borrowers in some segments may be placing increased reliance on this source of funding. How stable this funding will prove through-the-cycle is not yet clear, as the sector's underwriting standards, and lenders' tolerance to losses, have not been tested by a downturn."