Global | From FinTech to BigTech: an evolving regulatory response

Summary

The digital transformation of financial services has opened up the market to new providers: FinTech start-ups and BigTechs. In this article, we explain how policymakers’ mindset should evolve towards a comprehensive response to ensure the financial sector remains safe, stable and open to competition.

Key points

• Key points:
• The digital transformation of financial services has led to a new competitive environment characterized first by the unbundling of services by FinTech start-ups and increasingly by the re-bundling within BigTechs’ digital ecosystems.
• Policymakers responded to the FinTech phenomenon with a piecemeal approach that sought to ensure an adequate control of new risks while promoting innovation-enhancing competition.
• However, the magnitude and nature of risks are likely to change, as is the nature and degree of competition in the financial industry, with the second wave of competition - the BigTechs.
• Therefore, policymakers’ mindset should evolve towards a more comprehensive response to ensure the financial sector remains safe, stable and open to competition.

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