A push by big technology firms into financial services in developing countries will improve access to them, but might also make traditional lenders more vulnerable, the Financial Stability Board (FSB) said.
The expansion in emerging markets has generally been more rapid and broad-based than that in advanced economies, the FSB, which coordinates financial regulation for the Group of 20 Economies (G20), said in the report released on Monday.
Lower levels of access to traditional banking and financial services developing economies had created demand for services now offered by big tech firms, the report found, particularly among low-income populations and in rural areas.
An increasing availability of mobile phones and internet access supported this trend, the FSB said.
“However the expansion of BigTech activity also gives rise to risks and vulnerabilities,” it said, pointing to lower financial literacy and firms using other data gathered.
“Competition from BigTech firms may, in places, also reduce the profitability and resilience of incumbent financial institutions and lead to greater risk-taking,” the FSB added.
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