Public policy for big techs in finance

Introductory remarks by Mr Agustín Carstens, General Manager of the BIS, at the Asia School of Business Conversations on Central Banking webinar, "Finance as information", Basel, 21 January 2021.

The entry of large technology firms (big techs) into financial services holds the promise of efficiency gains and can enhance financial inclusion. But the growth of their services raises questions on whether and how the regulatory framework needs to adjust. In particular, big techs use data to offer a range of services that exploit network effects, generating further user activity that generates even more data. This dynamic, which the BIS has dubbed the "data-network-activities"– or "DNA" – loop, gives big techs with an established platform a head start when they venture into financial services. This brings benefits, but also costs associated with market power, operational resilience and data privacy. Public policy regarding big techs in finance thus needs to build on a more comprehensive approach that combines financial regulation, competition policy and data privacy. Such an approach would also support a level playing field between big techs and traditional financial service providers.