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Google, Facebook, Amazon and Apple have long since ceased to be just major technology companies. His interests increasingly cover more disparate areas, although the financial sector is undoubtedly one of its main objectives . Traditional banks and financial authorities, aware of this, have been closely monitoring their landings for a long time and are increasingly showing their concern about the consequences that could have for the sector itself and for consumers.
Yesterday it was the Bank of Spain and the Spanish Banking Association (AEB) who warned of the risks involved and the need for a "suitable" supervisory action to the circumstances. Why are banks and supervisors so worried inside and outside our borders? These are some of the reasons behind their warnings:
Unequal regulation
Traditional banks believe that bigtech and new digital financial actors are subject to more lax regulation and demand more homogeneity in this regard. The president of the AEB, José María Roldán, demanded yesterday through a statement "greater clarity" of the European authorities in the process of opening up to the competition of the banking sector, "so that when the new technological operators enter the Financial activity is done with the same rules of the game and the same level of demand that banks are currently required. " Roldán denounced an "unequal" competition among competitors, "as there is no reciprocity of obligations and rights, as is the case with access to customer data."
Payment Directive
Within the regulatory aspect, the payment services directive known as PSD2 has gained special relevance in recent months. This is how the AEB explains the scenario: The rule implies the opening, by banks, of their payment services to third companies, the so-called third party payment service providers (TPP), through the platforms that banks are obliged to create for that purpose (the already famous API or application programming interfaces ). In this way, new entrants will have access to customer data from banks that authorize it, without reciprocity, that is, without banks being able to access customer data from those TPPs. Therefore, banks are demanding that they be allowed to access customer data from these new operators.
"This asymmetry is not acceptable and must be corrected by allowing banks access to that data. All companies, at least from a certain volume of operations, must be governed by the same standards," said José María Roldán in his statement.
Trade with customers' money
The true purpose of the technology giants in the financial world is not so much to be a bank, but to operate with customers' money. In fact, they lack a bank file -which would allow them to be a bank-, since if they had one, they would be obliged to submit to the regulation of central banks and maintain the solvency levels required of traditional entities.
Instead, they do have other types of licenses. For example, Facebook and Amazon are licensed in Europe as a payment entity, as is Google, which obtained it in Lithuania and Ireland. These documents allow them to operate transfers, process receipts, make payments with cards or provide financing to customers. Virtually everything a bank does, except get deposits.
Data Protection
Data is the most precious loot and the main objective of the bigtech in their foray into the financial world. With them they can know the consumption habits of customers and adapt in a very personalized way the products they offer.
Traditional banking has a huge amount of information and consumer data, but has not yet developed all its potential to exploit them.
On the contrary, the technology giants have an enormous capacity to handle massive amounts of information, hence their crusade is focused on obtaining data. In addition to profiling products, these data give you the possibility to monetize the information by selling it to third parties for advertising purposes.
Domain and oligopoly
"One of our biggest concerns has to do with the lack of competition and the level of concentration that could derive from a greater presence of the bigtech," said Margarita Delgado, deputy governor of the Bank of Spain yesterday. Although in principle one might think that its presence in the market could introduce greater dynamism, "you can imagine scenarios in which the consolidation of the position of dominance of bigtech in financial services threatens the possibility of effective rivalry," he explained.
Pound
Within the fintech ecosystem, Libra is one of the elements that generates the most instability among authorities and governments of all countries. Delgado listed yesterday a good part of the threats that the Bank of Spain sees in relation to the project promoted by Facebook and almost thirty companies.
"The issues related to the protection of consumers" and the protection of privacy stand out. "We cannot forget that the recent history of one of its promoters has not been characterized, precisely, by carefully exploiting personal data," he said in clear reference to Facebook and scandals such as Cambridge Analytica . In the microeconomic field, it also poses challenges regarding the prevention of money laundering and the financing of terrorism .
At the macro level, the Bank of Spain conceives Libra as a possible threat to the stability of the financial system . "Libra could be a factor that amplifies the volatility of the financial markets, also affecting the payment business and the deposit taking activity of the banks with the consequent erosion of its income statement," Delgado said yesterday.
In addition, it could limit the scope and effectiveness of monetary policy measures and, in terms of payment systems , could drive parallel circuits to mobilize financial resources in the economies. "This would weaken the current role of the euro and other strong currencies as a secure settlement asset and, if the appropriate supervisory mechanisms are not applied, it would mortgage the control and intervention capacity that, today, the financial authorities have on fundamental infrastructure in the operation of our economic system, "said the head of the Bank of Spain.
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