ESAs call for changes to the monitoring of BigTechs’ financial services activities

ESAs call for changes to the monitoring of BigTechs' financial services activities

The European Supervisory Authorities (EBA, EIOPA, and ESMA – the ESAs) have released a comprehensive report, shedding light on the direct provision of financial services by BigTech companies in the EU.

The report not only catalogues the types of financial services undertaken under EU licences but also delves into the potential benefits, risks, and regulatory hurdles that accompany these activities. A noteworthy initiative from the ESAs is the establishment of a novel monitoring matrix aimed at enhancing oversight of BigTech’s imprint on the financial sector in the EU.

In the previous year, the ESAs took significant strides through the European Forum for Innovation Facilitators (EFIF) to conduct a thorough stocktake of BigTech subsidiaries engaged in financial services within the EU.

This initiative was in response to the European Commission’s request for advice on Digital Finance in 2022. The findings reveal that these subsidiaries, while predominantly operating in the payments, e-money, and insurance domains, have a rather limited presence in the banking sector. Interestingly, their involvement in the securities services market remains notably absent.

To fortify the cross-sectoral mapping of BigTech’s footprint in the EU’s financial ecosystem, the ESAs have put forward a proposal to develop a data mapping tool within the EFIF. This innovative tool is poised to offer a structured framework, enabling supervisors from the National Competent Authorities to effectively track and assess the direct and indirect influences of BigTech enterprises on the financial sector, both currently and in the future.

Moreover, the ESAs are committed to maintaining and enhancing cross-disciplinary interactions within the EFIF. This initiative aims to foster robust information exchange among EFIF members and other pivotal authorities, spanning both financial and non-financial sectors. Authorities focusing on data protection and consumer protection are particularly integral to this collaborative effort, ensuring a holistic approach to monitoring BigTech’s financial activities.

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