Hong Kong's Monetary Authority just granted virtual banking licenses to four big tech banks:
— another major Asian fintech hub — is currently exploring offering virtual banking licenses similar to the ones in Hong Kong, which would give big tech firms more options to enter the finance world.While consumers will benefit from new products launched by big tech firms, some are worried about the impact this will have on financial stability.
Entering the finance space would give tech giants access to more data and potentially push incumbents to assume greater risk. The Financial Stability Boardin February 2019 that big tech firms could introduce new risks to financial systems by compelling banks to loosen lending standards and take on greater risk to keep up with the competition.
Additionally, the board said that big techs like Alibaba, Amazon, and Tencent could use their wealth of data and massive customer bases to quickly expand their banking businesses. While this is good news for big techs, it would also give these companies even more access to consumer data, risking a data monopoly that could end up harming consumers.
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