The Royal Bank of India (RBI) warned of the potential of Big Techs to dominate the financial services industry and invade banks in its financial stability report released yesterday.
Listed alongside climate risks, cyber attacks, and increased competition from entering fintechs, the semi-annual financial report describes the growing presence of Big Techs in financial services as a challenge for banks.
These days, tech giants are doing more than just dabbling – they have a large footprint in digital financial services, including payments systems, crowdfunding, asset management, banking, and insurance.
According to the Bank of International Standards [PDF], Amazon offers credit, payments, crowdfunding, and insurance, while Google, Apple, and Facebook all offer payments, and Google is expanding into banking.
Compared to American Big Tech, China is one step ahead of the financial services game. Alibaba’s Ant Group, Baidu, JD.com, and Tencent all offer banking, credit, payments, crowdfunding, asset management, and insurance services.
App-based digital banking services are naturally eating away at traditional banks’ market share.
RBI, India’s central bank, said that while Big Tech’s services support financial inclusion, generate lasting efficiency gains and encourage bank competitiveness, industry giants do not operate on an equal footing. with the banks and create political problems.
The big concerns, said RBI, are that technology companies operating as financial services do not have sufficiently clear governance structures due to their extensive business plan, have the potential to dominate, and can leverage their network more. wide to expand the provision of financial services unfairly. way.
The organization would prefer to see specialized regulation for Big Techs in the financial sphere and affirms the need for international rules and standards as the digital economy goes global.
China recently cracked down on local tech companies acting as financial services companies, forcing Alibaba’s Ant Group to restructure its consumer lending business before allowing it to operate as such.
India has also tightened the reins of tech companies in recent times. Last week, the government proposed a ban on e-commerce sites offering discounts on private label products and the Indian Competition Commission launched an antitrust investigation into Google’s smart TVs. Indian politicians recently ordered the removal of social media posts and complained about the removal of social media posts.
Last month, the Indian government asked Twitter to stop offshoring and outsourcing or risk losing legal protections. And earlier this year, Amazon Prime’s content manager in India faced legal issues over the distribution in the country of content deemed offensive by the company. Â®