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Established 1995
Monday 27 May 2019


Amazon and Alipay ‘pose threat’ to banks

Written by Hannah McGrath

Big data giants like Amazon and Alipay pose an “existential” threat to traditional banks, the head of the Bank for International Settlements has said.

In an interview with Reuters on the sidelines of an international banking conference, Agustín Carstens said that the volumes of data which tech companies gather on customers potentially gives them an advantage over established retail banks in terms of assessing risk for lending purposes.

“This can be an existential threat to some financial intermediation firms so it is very important for us to get all of this early on and try to steer it without distortions,” Carstens told the news agency.

In a discussion of groups such as Alipay, Tencent and other tech firms, Carstens - a former governor of Mexico’s central bank - explained: “Each model is different, but what is universal is the exploitation of information.

“Amazon doesn’t have much of an open financial intermediation model, they don’t have a financial arm like Alipay, but there is nothing that prevents them from generating it.”

He added that it has not yet been proven how much of an advantage social media and shopping data can offer tech companies that decide to expand into the financial services space.

It has long been thought that Amazon and Alipay will look in future to diversify beyond its payment services into more traditional financial initiatives including online banking.

Earlier this year a survey of more than 8,000 consumers showed there would be strong appetite among younger consumers for personalised banking services from tech and social media companies such as Amazon, Facebook, Google or Apple.

There is a strong appetite among younger consumers for banking services from technology firms, as they could offer greater convenience and more personalised services.

The report for MuleSoft found that one in three global consumers would consider using the likes of Amazon for banking services; a figure which rises to 52 per cent for those aged 18-34.

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