Banks in Europe Want More Regulation Of Large Tech Companies

Some of the biggest banks in Europe are urging regulators to increase oversight of large technology companies that are moving into the financial services market.

The Financial Times, citing some of the banks, reported that the new open banking rules that require European Union lenders to provide account access of customers to third parties has resulted in concerns on the part of bankers that Chinese and U.S. technology companies will choose to go only after the best parts of the financial services market. BNP Paribas chairman Jean Lemierre pointed to digital wallets at an event that was covered by the Financial Times. He said they are another way to take deposits from customers — and as a result, should be regulated the same way. “When a third party gets involved in the payments system, it is hard not to see a deposit-taking activity — and we have done a lot of work to protect depositors in the past,” said Lemierre at the event hosted by the Institute of International Finance, which is a banking lobby group. “The magic word here is wallet. For me ‘wallet’ is close to deposit, so they [regulators] have to take a view on this.”

Meanwhile, the executive chairman of Banco Santander, Ana Botin, said at the same event that Europe was behind the U.S. and China because there are too many markets for financial services. She said that currently there isn’t a level field when it comes to data. She doesn’t mind taking on tech companies but wants its to be on the same terms. “They are all taking deposits and making payments,” said Botin, according to the Financial Times. Botin wants a “single legal framework for data,” noted the report. Meanwhile, the chairman of UBS Axel Weber said at the same event that the banks aren’t using data the way they could or that others have already started using it.

The banks are concerned that opening their data in Europe will not give them the same access to the large tech companies in the U.S. There’s also worries about the market share grab from the likes of Alibaba and Tencent in China, which are in the lead when it comes to retail payments. Despite the pleas, the report noted that regulators don’t seem keen to make any changes. “We are reluctant to come up with any kind of regulation for fear of stifling innovation,” said Bill Coen, secretary-general of the Basel Committee on Banking Supervision. He noted that he is watching the space to ensure there aren’t any financial stability risks associated with the rules.