Submit your view: FCA consults on Big Tech entering financial services

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The FCA is seeking views on the potential competition impacts of Big Tech firms entering and expanding into the retail financial services sector.

The Payments Association will be responding to this consultation and we would like to represent our members’ views.

What is the consultation about?

Big Tech firms’ presence internationally and in the UK financial services markets has been increasing with the potential to grow and change market outcomes quickly.

Why is this important? The purpose of the FCA’s paper is to stimulate a discussion on the potential competition impacts identified using existing research to inform its approach to Big Tech firms.

How do I share my views?

 What’s the deadline?

  • The Payment Association’s deadline for comments: 23rd December
  • The consultation deadline: 15th January

What’s next? The FCA wants to develop an effective competition approach for Big Tech firms in UK financial services that is coherent with the wider regulatory landscape in the UK and internationally. They plan to publish a Feedback Statement in the first half of 2023, setting out its response and how it will develop the regulatory approach in response to the feedback received.


The FCA has focused its analysis on four retail sectors:

  1. Payments;
  2. Deposit taking;
  3. Consumer credit; and
  4. Insurance

After having examined the four retail sectors in scope, it found five key themes emerging:

Potential for Big Tech firms to enhance the overall value of their ecosystems with further entry and expansion in retail financial services sectors through innovative propositions. The payments sector has often been the first point of entry for, for example, Google Pay and Apple Pay. Over the longer-term, Big Tech entry is unlikely to be independent between financial services markets because entry into one market will create opportunities for expansion into complementary markets, with Big Tech firms’ core and other activities playing a role.

In the short term, a partnership-based model is likely to continue to be the dominant entry strategy for Big Tech firms. In the longer term they may seek to rely less on partnerships and compete more directly with existing firms. Big Tech firms may look to bring more activities in-house and expand their service provision along the value chain through mergers and acquisitions, organic growth, or a combination to compete more directly with existing providers.

Big Tech firms’ entry may not be sequential or predictable. While initial forms of entry may be hard to predict, once momentum builds, we might see significant market changes occur quickly. Big Tech firms’ ecosystem business models and conglomerate operations mean entry into one financial services market will create opportunities for expansion into complementary financial markets.

In the short-term, and possibly longer, Big Tech firms’ entry in financial services could benefit many consumers. These benefits could arise from Big Tech firms’ own innovations, as well as increasing other market participants’ incentives to innovate, improve quality and reduce prices of financial products and services through increased competition.

In the longer term, there is a risk that the competition benefits from Big Tech entry in financial services could be eroded if these firms can create and exploit entrenched market power to harm healthy competition and worsen consumer outcomes. This risk can arise given the characteristics of digital markets (including economies of scale and scope, limitations to switching and multi-homing, incumbent data advantages and network effects) and the characteristics and behaviours of Big Tech firms (including global scale and large user bases, rich data about their users with advanced analytics and technology, influence over decision making and defaults, ecosystems of complementary products and their strategic choices and investments). These characteristics can lead them to rapidly gaining market share, markets ‘tipping’ in their favour, and potential exploitation of market power.


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