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The Big Tech/FinTech Disruption

A new report by the Financial Stability Board argues that the Big Tech could “affect the degree of concentration and contestability in financial services, with both potential benefits and risks for financial stability.” Managing the risks will require much more than vigilance by banking supervisors.

LONDON – As its Valentine’s Day present to the world, the Financial Stability Board (FSB) in Basel published a report on financial technology, or fintech, and market structure in financial services. The subtitle was more insightful, and revealed the authors’ intentions: “market developments and potential financial stability implications.”

The report’s premise is straightforward. The arrival of established technology giants, or Big Tech, on the financial scene could “affect the degree of concentration and contestability in financial services, with both potential benefits and risks for financial stability.”

The focus is on companies like Apple, Google, Facebook, Amazon, and Ant Financial, rather than the myriad fintech startups in Silicon Valley, Israel, or clustered round the Old Street roundabout in London. Central banks and finance ministries are beginning to ask whether the activities of the tech behemoths, whose market capitalizations now dwarf those of even the biggest banks, will be wholly benign.

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