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Margarita Delgado, deputy governor, warns that bigtech act as intermediaries “without assuming responsibility for transactions”
The deputy governor of the Bank of Spain, Margarita Delgado, has warned this Wednesday that the action of the bigtech, (the big technology companies Google, Facebook, Amazon and Apple) as financial intermediaries can “carry systemic risks, as we had the misfortune to verify with the outbreak of the financial crisis “. This panorama, Delgado commented in her speech, is a concern of the Bank of Spain due to the lack of competition over these firms and the level of concentration that could derive from a greater presence of bigtech,
In his opinion, these large firms “seek to take advantage of the synergies between financial services and business generation without having to bear the associated risks. It should be remembered that, without adequate supervision, these types of business models, in which intermediaries do not assume Any responsibility regarding the successful completion of transactions, may entail systemic risks “.
“Thus, an ecosystem of complex interrelationships is being formed and, in many occasions, opaque for the authorities, whose potential implications on financial stability, competition or consumer protection seem profound,” said Delgado,
The deputy governor recognized that “this challenge is not easy in a context of the appearance of new agents and new types of interdependencies and interrelationships that can create systemic vulnerabilities.”
According to her, the top ten technology companies now have more than 50 kinds of financial services in their portfolio, “to which should be added an increasing number of alliances and collaboration agreements with countless entities, all over the world” .
Access bigtech information
He also remembered an issue that has been complained of many times by banks for a long time. “The accumulation of this information in a few technological platforms can place them in a situation of competitive advantage in the provision of a wide range of services, including financial services. In this sense, it is worth considering whether, as has happened with banking and payment transaction data, the possibility that, with prior consent, other companies can access this information should also be regulated to balance the starting situation “.
And he admitted: “The authorities are aware of the benefits that bigtech could report from the modernization and development of the financial system. However, there are concerns derived from the entry of these agents into the financial space, to which the authorities would have to give answer “since” they require a new approach to design and execute public policies “.
For the number two of the Bank of Spain, the characteristics of these firms, known as GAFA for its acronym, allow them to be equated “in their capacity as potential providers of financial services, to the figure of the banks of global systemic importance, making evident the need to design a strategic and regulatory response capable of rising to the occasion. “
And he gave as an example what is happening in China: “In just four years, the share of non-bank agents in the retail payment market has gone from 59% to 76%; a situation that has motivated the adoption of the first measures specific regulatory “.
In his opinion, the accumulation of records of these great technologies to create value on them, together with other statistical techniques that are alternative to the traditional ones, can “alter the way in which certain financial services such as the granting of credit are provided.”
He also referred to the growing use of banking ‘apps’, since almost three out of four Spaniards use mobile banking, according to a survey carried out by MasterCard. Furthermore, around 10% of Spanish users of these applications are also users of ‘fintech apps’.
However, he asked that the advancement of new technologies not make us forget that 20% of Spaniards do not regularly use online banking to manage their finances and prefer to resort to traditional channels.
He underlined the increase in competition derived from the entry of non-banking actors is one of the most distinctive characteristics of the new environment, since users have gone from practically interacting with a single entity to having an account in an entity and ordering, for example , your payments through the interface provided by another provider.
“This situation could lead to some banks losing contact with customers, being relegated to performing typical back-office tasks,” said Delgado, who believes that financial institutions are in a “good starting situation”, but they must maintain high standards of compliance with the rules and best practices of privacy and information management.
Among the changes that he sees as necessary, he has cited the remodeling of the computer architecture, the establishment of efficient governance in data management, having access or being able to develop the necessary analytical tools or incorporating experts in the field, in a context of “narrowing of margins and high competition, in which the control of costs and the correct discrimination of transactions by risk and price are essential to remain competitive”.
The deputy governor stressed the importance of capitalizing on strengths, with extensive and complete databases; change the mindset and bet on cooperation. “The magnitude of the challenge is great and increasing,” she added, after noting that regulation should aim to be as “neutral, fair and symmetrical as possible.”
Roldán: The pound is a threat to national sovereignty
“The financial sector is called upon to reinvent itself to remain relevant,” added Delgado, who assured that the future of the banking business involves access, management and exploitation of the information available to be able to capitalize on the competitive advantages that the sector presents.
The president of the Spanish Banking Association (AEB), José María Roldán, warned this Wednesday, in the same sessions, about the risks involved in Facebook’s cryptocurrency, Libra, and demanded the same rules for the different operators, be they banks or ‘ bigtech ‘, if they operate in the same field of financial activity.
On the other hand, he pointed out that the supervisor of Japan has already alerted central banks and regulators about “some developments and a new world, which we cannot continue to ignore” and that opens many unknowns. In his opinion, he represents a “threat to national sovereignty” insofar as he represents a new currency, which may therefore entail a “risk to
financial stability “.
He considered that this danger would be “even greater” in emerging economies, if it becomes a “formidable competitor” of their currencies and, in general terms, indicated the difficulty that it may also entail for the authorities in transmitting the effects of their policy. monetary.
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