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The report puts rather less focus on the systemic risk and predatory pricing that could emerge if the world’s largest technology companies and the biggest banks on Wall Street share consumer data.
The blending of platform technologies, big data, artificial intelligence and consumer finance is only the latest and most turbo-charged combination of banking and commerce. Prior iterations, enabled by 1990s financial deregulation, did not end well.
The Cornell University professor whose work first sparked serious media interest in the topic, Saule Omarova, will be speaking at the fintech hearings. Her latest research raises questions about whether the blending of big tech companies and finance is in the public interest.
Data portability — the ability of consumers to share their data with multiple private and public sector institutions — does have some advantages. But the accompanying risks, particularly when it comes to sensitive areas like financial or healthcare data, argue for a cautious approach.
The EU started allowing data sharing among big banks and tech companies earlier this year, but it required very clear opt-in and opt-out provisions to protect consumers.
So far very few European banks have actually used the new data sharing rules to sign deals with the biggest tech companies. That may be because the banks still remember lessons learnt during the financial crisis, about how complexity and opacity in what seem like everyday transactions can blow up wildly. Or more probably they are merely a few paces behind their US counterparts, many of whom are already jumping on the fintech bandwagon with all too much zeal.
Full article on Financial Times (subscription required)