Apple, Google, Whatsapp: the digital giants are already widely present in payment solutions. From there to becoming real financial and banking players, there remains a chasm and many obstacles to cross, which the traditional players in the sector, supported by the States, are in no hurry to see disappear.
This is undoubtedly one of the greatest fears experienced by the European banking sector: that the Gafam (Google, Amazon, etc.) “fall on its head”. For years, the American tech and internet giants have revolved around financial services, and could one day launch a traditional banking offer from their powerful platforms. "We have two years - not more - to build a European alternative to bigtechs", declared this week the governor of the Banque de France, François Villeroy de Galhau in his wishes to the financial center of Paris.
For now, the offensive is broadly limited to payment services, a business whose strategic value the banks have measured – too late. With Apple Pay, Google Pay, or Whatsapp (which belongs to Facebook), each of these giants pushes its pawns according to specific methods. But with consistency. However, for the first time in a long time, an obstacle could slow down this progress: a framework for bigtech which could profoundly change in nature in the coming years. These are in no way barrier measures, aimed at artificially limiting access to banking services. In recent years, the European authorities have, on the contrary, favored the emergence of fintechs and forced banks to provide greater access to their information systems. What is taking shape is not in the order of simple regulations, but rather a fundamental movement: everywhere in the world, whether or not it is a question of finance, the public authorities are thinking about how to apprehend bigtechs as such.
Due to their size and having known how to make themselves indispensable in a myriad of sectors of activity, the Gafams (just like their Chinese equivalents, the BATXs) have taken on systemic importance in the world economy, and the eventual failure of such a player would probably be a transmission channel for an economic or financial crisis.
Global financial regulators, within the G20, as at European level, are trying to draw all the consequences. This vision is still quite embryonic, and it is too early to say on what concrete measures it could lead. But certain signs converge and give a taste of it.
One thinks, for example, of the European project to regulate banking cloud providers (within the DORA directive) which could lead, in a few years, a European financial regulator to monitor the banking cloud activities of an Amazon or a Google.
Another clue, at the end of 2019, the
G20 Financial Stability Board (FSB), sounded the alarm in a report devoted to Gafam and their ambitions in finance. In particular, in the event of a financial crisis: by distributing financial services, even via a banking partnership, they would relay the risks associated with this crisis on a potentially more massive scale than a bank would.
If we go to the end of the reasoning - which the G20 does not yet do - if a company is considered "systemic" (from the financial point of view), could this imply - as for banks - heavy investments in infrastructure? Or capital ratios to be respected?
What accelerates the debates is also an awareness on the part of the States: a technological group that is “too” innovative in financial matters ends up affecting the sovereignty of the State. A red line which, when it is crossed, or appears to be about to be crossed, generally provokes a very rapid reaction from the public authorities.
The virtual currency project carried by Facebook, Libra (renamed “Diem” last December), thus sounded like a warning. Here is a private group, which, via a foundation based in Switzerland, was preparing to put into circulation a “stable coin” (a cryptocurrency whose value is based on a basket of currencies), usable by two billion users.
Regulators have given it a cold reception, identifying risks in terms of financial stability, control of monetary policy or respect for the privacy of users. A new version of the project should be unveiled in the coming weeks.
This sovereign logic also played out in China, where the authorities abruptly put an end to the giant Ant Group's IPO project, before ordering it to refocus on payment, its original business. The group had also developed in credit and investment solutions, on the sidelines of the powerful banks controlled by the State...
Beyond the stated intentions, ensuring the financial regulation of Gafam will however be a headache. At least two major challenges present themselves: the first consists in finding the right way to regulate a platform which, by definition, does not only make savings, credit or payment, but practices a wide range of trades. Will it then be necessary to supervise it business by business (in silos), at the risk of losing consistency? Or rather work according to cross-cutting themes (for example, the fight against money laundering, respect for private life, etc.)?
The second issue concerns the necessary international cooperation in terms of supervision. In the financial field, banking police around the world agree on non-binding standards, which are then applied in each country. But for a technology platform, this global coordination has yet to be created. This is a great handicap when trying to tame “animals” that are largely dematerialized and active all over the world.