Home News Industry News Big tech’s move into financial services presents risks, FSB warns

Big tech’s move into financial services presents risks, FSB warns

Big tech and fintech companies’ expansion could lead to market dominance, a report says

  • By: IE Staff
  • March 21, 2022 March 21, 2022
  • 13:25
technological developments
iStock.com / Mikhail Seleznev

Large technology companies have expanded their reach into financial services during the Covid-19 pandemic, a development that presents benefits as well as risks to the financial system, a report from the Financial Stability Board says.

The benefits include cheaper services for consumers and access for previously underserved groups, the report released Monday said.

However, big tech and fintech companies’ expansion could also lead to market dominance, the FSB cautioned.

“There could be negative financial stability implications from dependence on a limited number of BigTech 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,” it said.

The report said there are data gaps that make it harder for regulators to assess big tech firms’ systemic importance and financial risks, which also makes it difficult to decide how to regulate such firms. Data on tech companies’ market share is scarce, but proxies suggest their footprint has expanded, the FSB said.

Latest news In Industry News

Markets slump Friday as investors grapple with banking fallout, rate uncertainty

Big banks don’t necessarily have same problem as regional banks: Mackenzie CIO

Canadian investors shy away from foreign stocks

Outflows from foreign securities hit $16.2 billion in January, StatsCan reported

Big U.S. banks create $30B rescue package for First Republic

The California-based bank serves a similar clientele as did failed Silicon Valley Bank

Experts, banks in U.S. look for ideas to stop next bank failure

Tougher regulations are a key focus

Today's top stories

New SRO highlights proprietary product conflicts

A review identified gaps in addressing conflicts associated with proprietary products

How Manulife Securities-Fidelity deal signals a larger trend

Fidelity Clearing Canada will provide its uniFide back-office technology to Manulife Securities

Credit Suisse–UBS deal offers hope, but bank doubts persist

Some customers were caught off guard by the turmoil, at odds with Switzerland's reputation as as stable banking haven

CFA adds private wealth specialization to Level III

The change is one of five updates to the CFA program aimed at making the charter more practical