A recent Bank for International Settlements (BIS) bulletin focused on big tech - the challenges associated with the operation of large technology companies in the financial services sector, particularly in relation to the payments system.

In addition to issues such as financial risk, consumer protection and operational resilience, the entry of big tech into financial services raises new challenges related to the concentration of market power and data management.

Huge amounts of data controlled by groups such as Facebook, Google, Amazon and Alibaba can significantly impact the financial market, including banking systems. In China, for example, the two big payments technology companies have a combined 94% market share in mobile payments, as BIS points out. The rapid growth in payment transactions over several years shows how quickly large technology companies are able to establish themselves. In addition to payments, they have also become lenders to individuals and small businesses, as well as offering insurance and wealth management services. A survey of consumers, both in the US and in the rest of the world, also shows that large technology companies are the least trusted when it comes to the use of their data.

At present, regulation of financial market activities takes place through a system of authorisations for the provision of specific financial services. In the case of big techs, a way to regulate their activities may be to create separate rules for them.

Bulletin is available at: https://www.bis.org/publ/bisbull45.pdf