Big tech firms offering financial services pose risk to financial stability: RBI | Business News,The Indian Express

Big techs can scale up rapidly and pose risk to financial stability, which can arise from increased disintermediation of incumbent institutions, according to the 25th Financial Stability Report (FSR).

Big tech companies offering financial services pose risk to financial stability as their complex intertwined operational linkages with financial institutions could lead to contagion effect and potential anti-competitive behaviour, the RBI has said.

The central bank, in its 25th Financial Stability Report (FSR), said the advent of FinTech has exposed the banking system to new risks which extend beyond prudential issues and often intersect with other public policy objectives relating to safeguarding of data privacy, cyber security, consumer protection, competition and compliance with anti-money laundering policies.

Big techs can scale up rapidly and pose risk to financial stability, which can arise from increased disintermediation of incumbent institutions, it noted.

“Moreover, complex intertwined operational linkages between BigTech firms and financial institutions could lead to concentration and contagion risks and issues relating to potential anti-competitive behaviour,” as per the report released on Thursday.

Regulators and supervisors face a challenging balancing act between innovation-friendliness and managing risks to financial stability.

https://indianexpress.com/article/business/big-tech-financial-services-pose-risk-rbi-8003413/

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