Big tech entering emerging markets with financial services could cause competition concerns for domestic FinTech operators and lead to negligent customer protection, the Financial Stability Board (FSB) warns in a new report.
The report is due to be presented before G20 finance ministers and central bank governors for their virtual meeting on 14 October.
It found that big tech’s expansion into emerging and developing markets has been faster and more far-reaching than that enjoyed by advanced economies.
It noted that massive under-services populations has created a nurturing environment for these solutions to flourish.
However, while big tech entering these markets has allowed more under-serviced people to access financial services, the FSB warns that it also comes attached with risks.
The FSB said that the “expansion of big tech activity also gives rise to operational and consumer protection risks and concerns about market dominance. Competition from big tech firms may, in places, also reduce the profitability and resilience of incumbent financial institutions and lead to greater risk-taking.”
The FSB added that strong regulation and supervision may help in minimising these risk.
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