FSB: Big Tech’s Entry Into FinTech Will Cause Unfair Competition, Will Need To Share Customer Data
- The Financial Stability Board recently examined a report on the integration of financial services into Big Tech companies.
- Countries like Ireland and Lithuania in the EU have already secured licenses for payment services.
The evolving state of technology around the world has led many regulators to take note, pushing for rules that better govern the need for financial stability, data privacy, and competition.
The Libra stablecoin by Facebook has raised a lot of technical questions since its announcement. Now, Reuters is reporting that Big Tech companies like Google and Alibaba may have to share their data on customers with their competitors to even the playing field.
On Sunday, a report was released for the Financial Stability Board, covering the “vigilant monitoring” of the way that Big Tech is getting involved in financial services. The FSB believes that banks may be stifled in their current ability to create capital through the profits they hold. In countries like China, the Big Tech companies are making it possible for underserved communities to gain access to financial services, according to this report.
The big players that the FSB brings up include Tencent, Microsoft, Amazon, eBay, Baidu, Apple, and Facebook, stating that these companies and others have huge databases, though they also offer payments, lending and asset management. In Luxembourg, Ireland, Lithuania, and other European Union countries, Big Tech firms like Google, Alipay, Facebook have already secured payments-related licenses. However, the volumes are still far from substantial.
There are already banks in Europe and around the world that have to share customer data with their rival fintech companies that also want to offer payment services. The FSB believes that this same sharing requirement should be applied to Big Tech, considering their involvement now. The board added,
“Big Tech firms’ ability to leverage customer data raises the question of whether – and the degree to which – authorities could consider the potential to promote the mobility of data between the various actors that are involved in the provision of financial services.”
Furthermore, the FSB states that this simple act could create “a level playing field” and could promote competition.
It's possible that regulators may need to do exactly what was done before with insurers and asset managers, which means they’ll need to primarily focus on “activities that have implications for financial stability,” rather than looking at the size of the firm alone.