Template-Type: ReDIF-Paper 1.0
Author-Name: Frederic Boissay
Author-X-Name-First: Frederic
Author-X-Name-Last: Boissay
Author-Name: Torsten Ehlers
Author-X-Name-First: Torsten
Author-X-Name-Last: Ehlers
Author-Name: Leonardo Gambacorta
Author-X-Name-First: Leonardo
Author-X-Name-Last: Gambacorta
Author-Name: Hyun Song Shin
Author-X-Name-First: Hyun Song
Author-X-Name-Last: Shin
Title: Big techs in finance: on the new nexus between data privacy and competition
Abstract: The business model of big techs rests on enabling direct interactions among a large number of users on digital platforms, such as in e-commerce, search and social media. An essential by-product is their large stock of user data, which they use to offer a wide range of services and exploit natural network effects, generating further user activity. Increased user activity completes the circle, as it generates yet more data. Building on the self-reinforcing nature of the data- network-activities loop, some big techs have ventured into financial services, including payments, money management, insurance and lending. The entry of big techs into finance promises efficiency gains and greater   financial inclusion. At the same time, it introduces new risks associated with market power and data privacy. The nature of the new trade-off between efficiency and privacy will depend on societal preferences, and will vary across jurisdictions. This increases the need to coordinate policies both at the domestic and international level.
Length: 21 pages
Creation-Date: 2021-10
File-URL: https://www.bis.org/publ/work970.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work970.htm
File-Format: text/html
Number: 970
Keywords: digital platforms, big techs, finance, data privacy, competition
Classification-JEL: E51, G23, O31
Handle: RePEc:bis:biswps:970