The Bank for International Settlements (BIS) is concerned about the growing role of large tech companies in the financial sector. The “bank of central banks” proposes a new classification of market players and better cooperation between central banks, competition authorities and those responsible for data protection.

Key takeaways

–Big tech firms (Gafam and BATX) entering financial services can scale up rapidly with user data from their existing business lines in e-commerce and social media, and by harnessing the inherent network effects in digital services. This is what the BIS calls the DNA loop trend for "data-network-activities".

–In addition to traditional policy concerns such as financial risks, consumer protection and operational resilience, the entry of big techs into financial services gives rise to new challenges surrounding the concentration of market power and data governance.

–The current framework for regulating financial services follows an activities-based approach where providers must hold licences for specific business lines. There is scope to address the new policy challenges by developing specific entity-based rules, as proposed in several key jurisdictions – notably the European Union, China and the United States.

READ THE FULL BIS BULLETIN HERE

Press release by BIS


Publié le 03 août 2021