Earlier this month Agustin Carstens, head of the Bank for International Settlements, has pointed out the increasing threat to traditional banking by the business structure of the online payments services providers and other giants like Alipay and Amazon with their holding of big amount of customer data.
Carstens, who last year took charge of The Bank of International Settlements (BIS), an umbrella group for the world’s central banks, has counted the position of big internet companies as being potentially advantageous over the established banks due to their gathering of huge amounts of data of customers.
Big data giants, for risk evaluation before providing a loan to a customer, are in a better position than banks by having more information about his/her lifestyles and spending behaviors.
Carstens, delivering his views in Banking Summit in London on December 4, on the growing influence of big data, has told on the sidelines that “This is very big”.
He also emphasized on the needs to properly route the processes of tech firms and importance of early control over payment system of data giants that could be threatening the financial services providers.
In China, Alibaba’s payment affiliate Alipay has been providing payment services and now, for market capitalization, has been coming closer to HSBC as regulators in China has been in thoughts for devising measures to closely monitor the payment system provoked by the growth of Alipay and other big companies like Tencent with offerings of payment facilities.
The possibility of big companies expanding their business into financial services with setups like traditional banking is still a big question in United States for big techs like Google, Amazon and even Facebook in social media firms.
Exploitation of information is one common thing in payment models which are different to each other in every region of the world, and that needs to be regulated for preventing it to potentially destabilizing the banking sector worldwide.