Big Tech Push Into Financial Sector Raises Concerns: RBI

Plans by Big Tech to foray further into India’s financial sector pose risks for traditional banks as the tech firms have the potential to become dominant players in financial services, the central bank said.

The plans will also create governance-related challenges for regulators, the Reserve Bank of India (RBI) wrote in its bi-annual financial stability report on Thursday.

Major technology firms “straddle many different lines of business with sometimes opaque overarching governance structures,” it said.

The RBI said concerns included operational risks, too-big-to fail issues, challenges for antitrust rules, cybersecurity, and data privacy. But it added that positive outcomes could include efficiency gains and more access to financial services.

Amazon and Google currently provide basic payment services in India. Both companies as well Facebook and others have applied for licences to operate broader retail payment and settlement systems in partnership with Indian companies such as Reliance and lenders.

The central bank’s warnings come at a time of much tension between the Indian government and US tech giants over issues that range from e-commerce rules to data privacy and content posted on their platforms. Amazon, Facebook, Facebook-owned WhatsApp, and Twitter have all been caught up in disputes with New Delhi.

India’s largest state-run bank and UNI Global Union which represents about 20 million workers globally last month also raised concerns about the entry of large tech companies into the country’s payments sector.

© Thomson Reuters 2021