RBI: Big Tech in FinServ threatens market ecosystem
This could disrupt stability and governance.
The central bank listed some of the difficulties, including antitrust issues, monopoly issues and cybersecurity risks, as well as concerns about data privacy.
As the RBI makes this statement, the Indian government has been battling big tech companies, especially Twitter, with a fight based on the implementation of the new intermediary guidelines and digital media rules. And other companies like Amazon, Google, and WhatsApp have actively participated in India’s Unified Payments Interface (UPI) real-time payments network. Amazon and Google have authorized financial intermediary services, including loans and card payments, on their payment platforms.
RBI said it sees several different things in terms of the big tech threat.
“First of all, they overlap many different (non-financial) industries with sometimes opaque overall governance structures,” the central bank said, according to the report. “Second, they have the potential to become dominant players in financial services. Third, large technologies are generally able to overcome scale limitations in the provision of financial services by exploiting network effects. “
According to the report, RBI wants large tech companies to be independently regulated against certain predetermined standards in a system similar to anti-money laundering (AML) practices.
Governor of the RBI Shaktikanta Das said FinTechs are likely to have a new and nascent influence on the country’s finances. He said FinTech “must challenge the financial sector with innovations and exponential growth. Leveraging FinTech for customer services will effectively control costs and expand banking and non-banking activities ”.
It will come with more digital payments and loans across all banking industries.