Regulators take aim at 'Big Tech' over users' financial data

Financial security, data privacy and competition are key concerns facing digital payment services from tech firms.

    Scrutiny by regulators is expanding beyond Facebook's plans for a digital currency called Libra, and into other financial services offered by large tech companies [File: Dado Ruvic/Reuters]
    Scrutiny by regulators is expanding beyond Facebook's plans for a digital currency called Libra, and into other financial services offered by large tech companies [File: Dado Ruvic/Reuters]

    Google, Alibaba and other "Big Tech" companies could be forced to share data on financial services customers with banks and financial technology firms to prevent unfair competition, an international financial watchdog said.

    As Facebook's plan for its Libra "stablecoin" faces scrutiny, a global body of regulators from the world's main financial centres said that Big Tech's expansion raised questions for financial stability, competition and data privacy.

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    The Basel-based Financial Stability Board (FSB) called in a report released on Sunday for "vigilant monitoring" of Big Tech's shift into financial services, which it said could make it harder for banks to generate capital through retained profits.

    While still in its early days, Big Tech in countries like China has brought financial services within reach of under-served communities, the FSB, which is chaired by Federal Reserve Governor Randal Quarles, said in the report.

    The FSB said companies including Microsoft, Amazon, eBay, Baidu, Apple, Facebook and Tencent, have enormous databases, while some offer asset management, payments and lending.

    Many Big Tech firms like Amazon, Facebook, eBay, Alipay and Google have acquired payments-related licences in European Union countries including Luxembourg, Ireland and Lithuania, although most have not yet built up sizeable business volumes in the area.

    Banks in Europe and elsewhere are already required to share customer data with third party "fintech" companies that want to offer rival payments services, and this may need to be the case with Big Tech too, the FSB said.

    "Big Tech firms' ability to leverage customer data raises the question of whether - and the degree to which - authorities could consider the potential to promote the mobility of data between the various actors that are involved in the provision of financial services," the FSB said.

    "Doing so may help encourage competition and help ensure a level playing field amongst market participants."

    Regulators may also need to replicate their approach to insurers and asset managers by focusing on "activities that have implications for financial stability" rather than focussing solely on the size of the firm, the FSB said.

    SOURCE: Reuters news agency