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 encouraged to play fast and loose with the rulebook and take more risks in order to keep pace with Big Techs
States the FSB: “The experience of EMDEs also underscores the need to apply the principle of ‘same risk – same regulation’ with respect to Big Tech firms’ activities, whilst tailoring regulatory frameworks to reflect the relative size and scope of those firms’ activities. Financial authorities may also usefully contribute to the development of robust public policy and frameworks with respect to data governance, consumer protection and operational risk management.”
October 12, 2020, published on Finextra