Big Techs in Finance: On the New Nexus Between Data Privacy and Competition

Frédéric Boissay, Torsten Ehlers, Leonardo Gambacorta and Hyun Song Shin

A chapter in The Palgrave Handbook of Technological Finance, 2021, pp 855-875 from Springer

Abstract: Abstract The business model of big techs rests on enabling direct interactions among a large number of users on digital platformsdigitalplatforms, such as in e-commercee-commerce, search and social media. An essential by-product is their large stock of user data, which they use to offer a wide range of services and exploit natural network effectsnetworkeffects, generating further user activity. Increased user activity completes the circle, as it generates yet more data. Building on the self-reinforcing nature of the data-network-activities loop, some big techs have ventured into financial services, including paymentspayments, money managementmoney management, insuranceinsurance and lendinglending. The entry of big techs into finance promises efficiency gains and greater financial inclusionfinancialinclusion. At the same time, it introduces new risks associated with market powermarket power and data privacyprivacy. The nature of the new trade-off between efficiency and privacy will depend on societal preferences, and will vary across jurisdictions. This increases the need to coordinate policies both at the domestic and international level.

Keywords: Digital; platforms; –; big; techs; –; finance; –; data; privacy; -; competition (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/978-3-030-65117-6_31

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