Big Tech’s push into financial sector poses risks, says RBI

‘Firms could become dominant players undermining banks’

FILE PHOTO: The logos of Amazon, Apple, Facebook and Google in a combination photo. REUTERS/File Photo

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 Reserve Bank of India said.

The plans would also create governance-related challenges for regulators, the RBI wrote in its Financial Stability Report.

‘Opaque governance’

Major technology firms “straddle many different lines of business with sometimes opaque overarching governance structures,” the central bank 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 RBI’s warnings come at a time of much tension between the Indian government and U.S. 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.