Big tech links are ‘policy blind spot’, says FSI

The growing financial activities of big tech firms and their internal and external links are a “blind spot” for policy-makers, the Financial Stability Institute warns.

The FSI – part of the Bank for International Settlements – explores the risks posed by big tech interdependencies in a report published on July 5. The analysis focuses on six tech giants: Alibaba, Amazon, Grab, Jumia, Mercado Libre and Rakuten.

The report notes how big tech firms have intragroup dependencies between financial and non-financial parts of the business. Firms use common infrastructure, analytical tools and credit scoring methods, sharing data on clients across the business.

“These intragroup dependencies raise the potential for difficulties regarding one or more parts of big tech activities to spill over across the entire group,” the report says.

It adds that big tech firms are “increasingly intertwined” with the wider financial sector. The “lack of transparency” around these links makes it hard for regulators to assess the risks, the report says.

“The existing regulatory framework was not formulated with closely connected digital platform ecosystems in mind and may miss the risks arising from interdependencies,” it says. “Addressing risks arising from interdependencies may require the development of specific entity-based rules for big tech operations in the financial sector.”