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2019 | OriginalPaper | Buchkapitel

3. BigTech Strategic Approaches: Worrying Competition?

verfasst von : Alessandra Tanda, Cristiana-Maria Schena

Erschienen in: FinTech, BigTech and Banks

Verlag: Springer International Publishing

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Abstract

By leveraging on the data acquired within their core businesses, BigTech firms have long offered financial services too, starting with payment services and continuing with lending and wealth management services. Strategies involving widening financial services provision can be implemented according to two main development lines: development to support the main core business or development to diversify the services offered. US and Chinese BigTechs, in particular, are offering an ever increasing number and wider set of products on the market, including via the creation of controlled dedicated financial intermediaries, to allow them to respond to customers’ needs with a holistic approach.

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Fußnoten
1
An insight into the size of this financial capacity is provided, for example, by the fact that if Ant Financial (the bank set up within the Alibaba group) were to be listed on the stock exchange it would be one of the top ten banks internationally in terms of market capitalisation and that the Alibaba group’s capitalisation is superior to that of the principal international banking groups (JP Morgan Chase, ICBC, Bank of America, Wells Fargo, etc.) (Carstens 2018).
 
2
A clear example is artificial intelligence (AI), in which the main BigTech firms are world leaders.
 
3
Press releases indicate that the partnership with Merrill Lynch could be extended to fund businesses which are not part of its marketplaces. Amazon has also made contact with JP Morgan to assess the potential for offering its clients current accounts (Financial Times 2018).
 
4
As the WeBank site shows, the bank has been authorised since December 2014, under the name Shenzhen Qianhai Weizhong Bank Co., Ltd.
 
6
The size of this investment fund, offered by Ant Financial, and the funds offered by Tencent’s subsidiaries has worried the Chinese regulatory authorities which saw some of the marketing techniques used by the funds as unethical as regards investors. These latter effectively prompted investors to perceive these solutions as alternative but equivalent tools to liquid deposits without investors being properly informed of the risks linked to investing in these funds. According to the Chinese market regulation authority, the China Securities Regulatory Commission, this mistaken perception of the risks by investors could potentially cause a liquidity crisis with consequences for the stability of the whole Chinese financial system at such time as savers may decide to shift their money from bank deposits to these monetary funds. The authority thus considered it useful to set out an annual redemption limit for monetary funds in order to limit cash flows from bank accounts and make the difference between the two financial tools in terms of liquidity availability more evident (Carstens 2018; Reuters 2018; UBS 2018).
 
7
The German Federal control authorities have published a study on the implications for financial services of the interaction between big data (BD) and artificial intelligence systems highlighting that the combination of these information elaboration systems (BDAI) constitutes a powerfully innovative factor for the financial system and may generate monopolistic formations by the large technological operators. Furthermore, standardisation of the lion’s share of financial activities might potentially lead to further expansion of dependency on information providers (BaFin 2018).
 
8
In this respect note that, in 2018, the European Central Bank updated its guidelines for the issuing of permits to provide banking services (ECB 2018a) and drew up a separate document focusing on FinTech lending bodies (ECB 2018b). Whilst, in its note accompanying the guidelines, the ECB specified that the FinTech banks are subject to the same regulations expected of other “traditional” banks, the contents of the guidelines specify additional requisites for FinTech lending bodies. We would argue that this may discourage FinTech firms from applying for banking licences in the European context and prompt them to continue to do business using the solutions used to date. For further consideration of this, see Sect. 5.​2.
 
9
Rebundling is a method involving unbundling financial products provided by various companies, and selecting and combining only the services consumers need, offering them as new financial products (Fujitsu Journal 2018). The rebundling process translates into a customer-centric experience involving a high degree of collaboration (WSBI-ESBG 2018).
 
Literatur
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Zurück zum Zitat Carstens, A. (2018, December 4). Big tech in finance and new challenges for public policy. Keynote address by the General Manager, Bank for International Settlements, FT Banking Summit, London. Carstens, A. (2018, December 4). Big tech in finance and new challenges for public policy. Keynote address by the General Manager, Bank for International Settlements, FT Banking Summit, London.
Zurück zum Zitat CB Insights. (2018). Everything you need to know about what Amazon is doing in financial services. CB Insights. (2018). Everything you need to know about what Amazon is doing in financial services.
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Zurück zum Zitat ECB. (2018a, March). Guide to assessments of licence applications. Licence applications in general. ECB. (2018a, March). Guide to assessments of licence applications. Licence applications in general.
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Zurück zum Zitat Financial Times. (2015, gennaio 5). Tencent launches China’s first online-only bank. Financial Times. (2015, gennaio 5). Tencent launches China’s first online-only bank.
Zurück zum Zitat Financial Times. (2018, March 5). Amazon in talks with JPMorgan to offer bank accounts. Financial Times. (2018, March 5). Amazon in talks with JPMorgan to offer bank accounts.
Zurück zum Zitat Frost, J., Gambacorta, L., Huang, Y., Shin, H. S., & Zbinden, P. (2019). Big Tech and the changing structure of financial intermediation. BIS working paper, 779, April 2019. Frost, J., Gambacorta, L., Huang, Y., Shin, H. S., & Zbinden, P. (2019). Big Tech and the changing structure of financial intermediation. BIS working paper, 779, April 2019.
Zurück zum Zitat FSB. (2019, February 14). FinTech and market structure in financial services: Market developments and potential financial stability implications. FSB. (2019, February 14). FinTech and market structure in financial services: Market developments and potential financial stability implications.
Metadaten
Titel
BigTech Strategic Approaches: Worrying Competition?
verfasst von
Alessandra Tanda
Cristiana-Maria Schena
Copyright-Jahr
2019
DOI
https://doi.org/10.1007/978-3-030-22426-4_3