Regulatory frameworks in emerging markets and developing economies (EMDE) should be redrawn to reflect the size, scope and growth of Big Tech firms in financial services, says the Financial Stability Board.
The FSB report for G20 finance ministers and central bank governors finds that the expansion of Big Tech firms in financial services in EMDEs has generally been more rapid and broad-based than that in advanced economies.
Lower levels of financial inclusion in EMDEs create a source of demand for Big Tech firms’ services, particularly amongst low-income populations and in rural areas where populations are under-served by traditional financial institutions.
While the expansion of Big tech companies like Facebook, Google and Amazon has some benefits, their activity also gives rise to operational and consumer protection risks and concerns about market dominance, states the FSB.
This applies as much to local incumbents as consumers, who the FSB fears may be
LONDON, Oct 12 (Reuters) – A push by big technology firms into financial services in developing countries will improve access to them, but might also make traditional lenders more vulnerable, the Financial Stability Board (FSB) said.
The expansion in emerging markets has generally been more rapid and broad-based than that in advanced economies, the FSB, which coordinates financial regulation for the Group of 20 Economies (G20), said in the report released on Monday.
Lower levels of access to traditional banking and financial services developing economies had created demand for services now offered by big tech firms, the report found, particularly among low-income populations and in rural areas.
An increasing availability of mobile phones and internet access supported this trend, the FSB said.
“However the expansion of BigTech activity also gives rise to risks and vulnerabilities,” it said, pointing to lower financial literacy and firms using other data gathered.