- FSB to push the tech giants to share financial services customers' data with banks & fintech firms.
- FSB says Big Tech's penetration into financial services threatens stability, privacy, & competition.
- Companies like Facebook, Alipay, Google, and eBay, hold payments licenses in the EU countries.
- The Financial Stability Board wants to apply a similar policy to insurers and asset managers.
In an attempt to ensure fair competition, the Financial Stability Board (FSB) announced on Sunday that Google, Amazon, Alibaba and a range of other tech giants could be pushed to share the financial services customers’ data with fin-tech firms and banks.
Following Facebook’s scrutiny for its upcoming Libra cryptocurrency, regulators from all over the world have made a consensus that the rampant growth of tech giants may pose a threat for financial stability, data privacy, and fair competition.
FSB Announces Aggressive Monitoring On Big Tech’s Shift Into Financial Services
In its report on Sunday, the FSB declared the need for an aggressive stance to thoroughly monitor the Big Tech’s penetration into the financial services. Such a shift, the regulatory body stated, may hinder the banks’ ability to use retained profits and generate capital.
As of 2018, U.S Federal Reserve’s Governor, Randal Quarles, has assumed the role of chairman for the Financial Stability Board. In the report, Quarles remarked that Big Tech’s penetration into the finance niche is fairly novel in the majority of the countries. However, in other countries including China, it is playing a crucial role in improving access of underserved communities to financial services.
The FSB, in particular, accentuated the names like Amazon, Microsoft, Baidu, eBay, Facebook, Tencent, and Apple, which currently have a gigantic database with many of the players offering additional services like payments, lending, and a broader asset management service.
Big Tech Companies Hold Payments Licenses In The EU Countries
It was further added that companies like Google, Facebook, Alipay, and eBay, already hold licenses related to payments in major European Union countries like Ireland, Luxembourg, and Lithuania. While many of these tech companies are yet to create big volumes, their license is sufficient to support the FSB’s vigilant monitoring.
According to the FSB, banks in multiple regions across the globe including Europe, are already legally bound to share such data with financial technology firms that aim to launch a third-party payments service. Such a policy, the FSB commented, should be applicable to the Big Tech as well.
Consequently, as per Quarles, the FSB will be able to play its role in leveling the field and encouraging fair competition among the market players. The chair also highlighted the need for the FSB to apply a similar policy to asset managers and insurers. He suggested that the board starts to remove its focus from the firm’s size and direct it on the individual activities that have the potential to disrupt financial stability in some way.