Big techs in finance: regulatory approaches and policy options

FSI Briefs  |  No 12  | 
16 March 2021


  • At present, financial services represent a relatively small part of big techs' overall activities, though this can change rapidly due to the unique features of their business models and they could quickly become systemically important – or "too big to fail".
  • Big techs' financial operations are subject to the same requirements as those of other market participants. As such, big techs need to hold appropriate licences to perform regulated financial activities or provide their services in partnership with financial institutions that meet the regulatory requirements.
  • Risks connected with big tech activities in finance may not be fully captured by the regulatory approach up to now, which is geared towards individual entities or specific activities and not the risks that are created by substantive interlinkages within big tech groups and their role as critical service providers for financial institutions.
  • An effective oversight of big tech activities in finance calls for going beyond a piecemeal policy framework and considering recalibrating the mix of entity-based and activity-based rules, in favour of the former in certain policy areas. A step further would be to assess the possibility of introducing a bespoke approach for big techs encompassing a comprehensive public policy framework. In any case, there is a need for enhancing cross-sectoral and cross-border cooperative arrangements.