The Financial Conduct Authority (FCA) is launching an inquiry examining the pending involvement of big tech in UK retail financial services
Warnings of financial services sector competition being harmed have been expressed by the UK regulator, as Amazon, Apple, Google and Meta look to continue innovating in the industry, reports the Financial Times.
The FCA will ask the corporations — which all hold FCA permits for payment processing in the UK — for their perspectives on how Silicon Valley could expand into payments, deposits, credit and insurance.
All four companies hold payment action permits, with Amazon and Apple also having some permissions regarding consumer credit and insurance.
While the watchdog acknowledges that big tech involvement of financial services would bring “increased efficiency” and “healthy competition” in the short term, it states that this could lead to longer term exploitation of ecosystems and data stores, to “lock consumers in”.
The body has also suggested that tech companies generally should share customer data with traditional financial service institutions.
>See also: How the regulation of big tech can affect your business
Sheldon Mills, executive director of consumers and competition at the FCA, explained: “Across the world, we’ve seen the capability of Big Tech to offer transformative new products in areas such as payments, deposits and consumer credit.
“We want to make sure that these benefits are fully realised while, at the same time, ensuring good consumer and market outcomes. This is vital when we consider the role of big tech firms in the provision of key technological infrastructure like cloud services.”
Amazon, Apple, Google and Meta are yet to comment on the FCA’s inquiry.
Involvement so far
Mobile payment apps such as Apple Pay and Google Pay were used by 27 per cent of consumers in 2020, double the statistic found in 2017, according to the FCA.
Building on this, Apple recently acquired credit reference agency Credit Kudos, with a view to launching a US-based ‘buy now, play later’ service called Apple Pay Later.
Additionally, Amazon announced plans to enter the UK insurance space with its Amazon Insurance Store, last week.
Responses to the FCA are allowed to be submitted until the 15th January 2023, with the body planning to issue a feedback statement in the second half of 2023.
Related:
Safeguarding the open source model amidst big tech involvement — Dima Lazerka, co-founder of VictoriaMetrics, discusses how the open source model community can be safeguarded amidst increasing big tech involvement.
Can fintech innovation be a force for good social impact? — With social impact rising up the corporate agenda, Paynetics CEO Mike Peplow considers the role that fintech innovation can play in this endeavour.
