On March 21, 2022, the Financial Stability Board (FSB) released a report entitled, FinTech and Market Structure in the COVID-19 Pandemic: Implications for financial stability. The key takeaway of the report credited the COVID-19 pandemic for the acceleration of digitization of retail financial services. The report also discussed individual engagement with “innovative financial service providers and traditional financial incumbents”; the expansion of BigTechs and larger FinTechs into financial services and the data gaps they present; and whether the benefits of digital acceleration during the pandemic will become structural or will “revert back” to pre-pandemic levels as the current conditions go back to normal.
While the FSB commented that the arrival of BigTech and FinTech firms in the market could result in the improvement of cost efficiencies and broaden financial inclusion benefits for underserved groups, some concern was expressed over the risk that BigTech and FinTech firms may achieve market dominance. The report further laid out steps authorities have made during the pandemic to establish policy actions related to financial stability, competition, data privacy, and governance issues. It also stressed “the importance of cooperation between regulatory and supervisory authorities, including those charged with overseeing the bank and non-bank sectors, and where relevant, with competition and data protection authorities.”
More information on the FSB’s report is available here.