The UK financial watchdog has launched an inquiry into the competition impacts of big tech firms, such as Apple Inc (NASDAQ:AAPL) and Alphabet's Google, on the financial services industry.
The Financial Conduct Authority (FCA) said it is “seeking views on the potential competition benefits and harms from big tech firms’ entry into a range of retail financial services sectors.”
Big tech’s presence in the financial markets, according to the UK regulator, has been steadily increasing, with the potential to expand and change markets.
"In recent years, Big Tech’s entry into financial services, in the UK and elsewhere, has demonstrated their potential to disrupt established markets, drive innovation and reduce costs for consumers,” said the FCA’s executive director of consumers and competition Sheldon Mills.
The FCA published analysis focused on the potential impacts of big tech’s entry in four retail sectors: payments, deposit making, consumer credit and insurance.
As an example, it noted that combining financial services with their existing business, for example with tools like Apple Pay, big tech can bring benefits to consumers. But while these might be innovative and deliver healthy competition, the FCA said in the longer term it could pose competition risks if they rapidly gain market share.
"We want to make sure that these benefits are fully realised while, at the same time, ensuring good consumer and market outcomes,” Mills added.
No regulatory changes are being suggested yet, but the FCA hopes its paper on the matter can “stimulate discussion” to inform future regulatory decisions.