The FCA has initiated an inquiry into the data asymmetry between technology companies and traditional financial services firms.
According to Finextra Research, this move comes amidst growing concerns over Big Tech’s deepening footprint in financial markets, particularly in segments like payments, deposits, and consumer credit.
Big Tech’s expansion into these areas has been gradual yet persistent, raising potential for rapid market transformation. Last year, the FCA launched a study to evaluate both the potential competitive advantages and the risks associated with this trend. One major concern raised by industry stakeholders is the uneven distribution and access to data. FS firms face limitations in accessing Big Tech’s data, which is not covered under existing data-sharing frameworks. Conversely, Big Tech entities have access to financial data from FS firms, creating a lopsided scenario.
The FCA underscores this issue, highlighting how Big Tech companies could leverage this data advantage, coupled with sophisticated analytics and AI capabilities, to shape market competition. “We would like to gather more focused information and evidence to assess the risk of the market developing in a way where Big Tech firms gain entrenched market power because of this data asymmetry,” the FCA stated.
To address these concerns, the FCA has issued a ‘Call for Input.’ This initiative seeks contributions from FS entities, Big Tech companies, FinTechs, trade bodies, and consumer groups. The objective is to gather substantial information and evidence by 22 January, aiding the FCA in evaluating the risks and potential strategies to ensure fair competition and market integrity.
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