The rise of BigTechs in finance highlights important issues

BigTechs have been rapidly moving to offer a wide range of financial services. But the role of BigTechs in the financial sector raises numerous issues as BigTechs are not regulated like financial institutions and, therefore, are not subject to the same stringent capital, leverage and liquidity constraints. While this can have numerous advantages, especially in terms of increasing access to finance or access to more-affordable finance, it is also important that regulators carefully monitor and guide this process in order to ensure fair competition and consumer protection.

But regulating BigTechs’ financial services activities will not be easy. Even when objectives are clear and uncontroversial, selecting the most appropriate policy tools will require navigating complex interactions. This includes navigating along two dimensions: (1) how much BigTechs will be encouraged/allowed to enter into the financial sector and (2) how data will be treated. In the end, it will be up to a combination of the market and regulators to answer these questions and strike the right balance that ensures fair competition and proper data protection.

Source: www.forbes.com