On 1 February 2024, the European Banking Authority published a report on 2023 stocktaking of BigTech direct financial services provision in the EU.
In 2023 the European Supervisory Authorities (ESAs) conducted a cross sectoral stocktake of BigTech subsidiaries carrying out financial services in the EU, through the European Forum for Innovation Facilitators (EFIF). The work was carried out complementary to the ESA’s mandate to monitor innovation in the financial sector and, as one of the EFIF’s priorities for 2023, as a follow up to the ESA’s joint release to the European Commission’s Call for Advice on Digital Finance (CfA). The stocktake was performed via a survey to Member State competent authorities (NCAs) represented on the EFIF.
The stocktake identified that:
- BigTechs have subsidiary companies carrying out financial services in the EU payments, e-money and insurances sectors, and in limited cases, the banking sector.
- No BigTech subsidiaries were reported as carrying out financial services in the securities and markets sector.
- Compared to the previous mapping exercise results in 2021 and 2022, BigTech’s direct financial service provision remains overall limited.
- Regarding the related opportunities and risks, as well as regulatory and supervisory issues, NCAs reiterated the observations set out in the CfA response.
- NCAs also highlighted that some risks relating to intra-group interconnectedness may warrant policy actions if BigTech direct provision of financial services in the EU continues to grow. NCAs particularly emphasised that the existing supervisor and regulatory framework applicable to BigTech financial services activities is activity-based, as opposed to entity/group based. This means the risks posed by intra-group interdependencies could be mitigated, however at present BigTech direct financial service provision does not threaten financial stability.
- As regards notification practices around cross border financial services, NCAs again highlighted deficiencies, reflecting how this issue is recurring.
As part of the EFIF 2024 work programme, the ESAs intend to further strengthen the cross sectoral mapping of BigTech financial services activities and relevant to the financial sector via the establishment of a multi-faceted data matrix. This aims to create a framework for dynamic monitoring (with more granularity) of the type and scale of direct provision of financial service activities of BigTech in the EU. To further identify and assess opportunities and risks, the ESAs and NCAs will continue the cross disciplinary exchanges to foster the exchange of information. Furthermore the ESAs may also carry out thematic analyses to increase supervisory visibility over specific activities to continue to foster a convergence in monitoring emerging activities and new trends.