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Big techs in finance: on the new nexus between data privacy and competition

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

No 970, BIS Working Papers from Bank for International Settlements

Abstract: The business model of big techs rests on enabling direct interactions among a large number of users on digital platforms, such as in e-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 effects, 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 payments, money management, insurance and lending. The entry of big techs into finance promises efficiency gains and greater financial inclusion. At the same time, it introduces new risks associated with market power and data privacy. 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)
JEL-codes: E51 G23 O31 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2021-10
New Economics Papers: this item is included in nep-ban, nep-big, nep-com, nep-cwa, nep-fdg, nep-fle, nep-ias, nep-mac, nep-pay and nep-reg
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Related works:
Chapter: Big Techs in Finance: On the New Nexus Between Data Privacy and Competition (2021)
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