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Big tech disruptors find dividends of financial services come at a price

Tech giants, which make up some of the world’s largest companies, are muscling into traditional banking spaces. But whether they want to crush the traditional finance players or enable them, they are learning across the globe that disrupting well-regulated banking systems is easier said than done

November 25, 2020 | Ellen Hardy
  • Chinese tech giants have been forced to definancialise and now see themselves as technology enablers across a range of industries including banking and finance
  • American big tech companies have been exploring a wide range of approaches to varying degrees of success, though partnerships with established players are so far providing the easiest entry points
  • Japanese competitors are looking to cash in on retail and services brand names through payments solutions both at home and across Asian markets

Before the COVID-19 pandemic hit, many thought 2020 is the year that big tech would truly crash the global finance scene. While some initiatives from tech giants have been put on hold, there is nevertheless a clear trend underway and traditional financiers are working hard to keep pace. With tech firms already having unrivalled amounts of customer data in their hands, banks have to reckon with their status as no longer the sole financial market force.

Yet as regulators are increasingly scrutinising big tech, we are beginning to see different regional approaches emerge. In Europe as well as Singapore and Hong Kong, digital banking licences have been introduced to build a well-regulated bridge between digital and traditional finance. China forced its tech giants to decouple their businesses and become technology enablers to established banks. Japanese firms are building businesses around retail and services as well as seizing opportunities in other Asian markets. In the United States banks have largely moved to build their own infrastructures, that is tech companies are looking to finance as a place to seek partnerships or disrupt, fearing being constrained by a more heavily regulated environment.

 

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Keywords:Big Tech, Financial Services, Global Finance, Technology, Unicorns, Customer Data, Retail, Digitalisation, Blockchain, Digital Wallet, 5g