Big tech financial services require new approach to regulation: Dutch central bank

The growing involvement of big tech companies such as Google, Amazon, Apple and Facebook in financial services requires a shift in the way the sector is supervised, the Dutch central bank has said.

In particular, legislation and regulations need to be adapted in response to new risks, there should be more European-level supervision and financial institutions are being seriously challenged on the sustainability of their business models, the central bank said in a new report.

‘Big techs do bring benefits, such as improved user experience, more innovative services and increased efficiency,’ the bank’s new supervisory chief Steven Maijoor, told a press conference.

But as these big tech companies expand their activities into different parts of the financial system, such as payment services, the boundaries between supervised and non-supervised entities are blurring, he said.

‘This means new risks may emerge – in the area of IT, for instance. It also means that business models are coming under increasing pressure,’ Maijoor said.

Unlike many traditional banks and insurance companies – and many financial technology firms, too –  the big tech firms operate at international or even global level. This, the central bank said, means their financial services can only be supervised at an international level as well.

In particular, regulators with mandates in the areas of cybersecurity, data protection, competition and financial supervision should cooperate more closely, the central bank said.