The pandemic has allowed Big Tech companies such as Google and Amazon to strengthen their grip on financial services, according to The Financial Stability Board.
This development, the FSB claims has ‘significant implications for incumbents and consumers’ – as the bigger businesses monopolise the market and reduce choice for consumers.
The report did underline that the expansion of Big Tech firms and FinTech companies into financial services can bring benefits including cost efficiencies and wider financial inclusion for groups previously underserved. However, the risk of market dominance looms large.
The FSB report said, “There could be negative financial stability implications from dependence on a limited number of Big Tech and fintech providers in some markets, the complexity and opacity of their partnership activities, and potential incentives for risk taking by incumbent financial institutions to preserve profitability.
“There could also be consumer protection risks from greater dependency on technology and data protection issues. In addition, the limited number of cloud service providers could magnify the impact of any operational vulnerability.”
The FSB says that the growth of Big Techs in particular underscores the need to address data gaps that currently hamper the assessment of those firms’ financial risks and systemic importance.
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