Big Tech's play in fin services can lead to systemic concerns: RBI Guv

Mumbai: Big Tech's play in lending activities using customer data and sophisticated algorithms can lead to "systemic concerns" like over-leverage and inadequate quality assessment of borrowers, Reserve Bank Governor Shaktikanta Das said on Friday.

The entry of firms like Google, Amazon and Meta, which are referred to as Big Tech, also poses concerns related to competition, data sharing, data protection and operational resilience of critical services, Das said while addressing the 'Modern BFSI Summit 2022' organised by The Financial Express here. This is not the first time that the banking regulator has expressed concerns about Big Tech's foray into financial services. In last year's Financial Stability Report, it had raised some broad concerns, including about such companies' products accepting deposits for some regulated financial sector entities.

Das said Big Tech players are present in the banking sector either by themselves or through tie-ups with banks or non-bank lenders. Citing the case of lending, he said they offer sophisticated services which use data from various sources to issue loans to users, including those not having collateral or credit history and added that lenders are using the platforms provided by fintech companies. "Such large scale use of new methodologies in credit assessment can create systemic concerns like over-leverage, inadequate quality assessment and similar other risks," he said, adding that authorities and regulators have to strike a fine balance between enabling innovation and preventing systemic risks.

"The Big Techs also pose concerns related to competition, data protection, data sharing and operational resilience of critical services in situations where banks and NBFCs utilise their services. These concerns can also materialise in sectors other than financial services," the Governor said. Lending through digital channels, including mobile apps, has brought in issues relating to unfair practices, data privacy, documentation, transparency, and breach of licensing conditions, Das said.