FS24/1 – Potential competition impacts from the data asymmetry between Big Tech firms and firms in financial services

Read FS24/1 (PDF)[1]

Why we asked for feedback  

As part of our 3-year FCA strategy, we committed to identifying potential competition benefits and harms from the Big Tech firms’ growing presence in financial services.

One area of concern was that the asymmetry of data between Big Tech firms and financial services firms could have significant adverse implications for how competition develops in financial services in the future.

We aim to mitigate the risk of competition in retail financial markets evolving in a way that results in some Big Tech firms gaining market power while enabling the potential competition benefits (from Big Tech entry and expansion).

Who this is for

This feedback statement will be of interest to:

• Big Tech firms
• established regulated financial services firms
• smaller challenger firms (including fintech firms)
• trade bodies of regulated firms
• consumers
• groups representing consumers’ interests
• national and international competition authorities and regulators with an interest in digital markets

Next steps

In determining our next steps, we have balanced the fact that no significant harms have arisen from data asymmetry to date, while starting to develop a regulatory framework that enables increased competition and innovation.

Our next steps are:

• We will continue monitoring Big Tech firms’ activities in financial services to assess whether policy changes are needed and working with our regulatory partners.
• We will work with Big Tech firms to examine whether their data from their core digital activities would be valuable in certain retail financial markets.
• Depending on these results, we will develop proposals in the context of Open Finance, and for the CMA to consider.
• We will examine how firms’ incentives (including Big Tech firms) can be aligned to share data where this is valuable to achieve good outcomes for consumers.
• Alongside these initiatives, the FCA and the PSR will work closely together to understand the risks and opportunities related to digital wallets.

Background

In November 2023, the FCA published a CFI[2] asking for information and evidence on whether any data asymmetry between Big Tech firms and financial services firms could influence how effectively competition evolves in financial services markets.

The CFI followed feedback[3] we received on our Discussion Paper[4] on the potential competition impacts of Big Tech entry and expansion in retail financial services (DP22/5), one of the key themes of which was on the role of data access and data sharing.