A recent report by BIS, highlights that big tech’s advance into the financial services industry is gathering pace. Whilst big tech companies extend less than 1% of global private sector credit their share is growing as they exploit competitive advantages over incumbents due to their data-gathering prowess and their ability to leverage machine learning to analyse credit data more precisely.
The BIS research will spur debate in the financial services industry about how to respond to the emergence of new competitors from Silicon Valley. Some banks are choosing to forge alliances with tech companies. Bank of America has signed a partnership with Amazon to offer loans to small US businesses, and the online retail group is understood to be in talks with banks about a current account product. Goldman Sachs, meanwhile, is launching a credit card with Apple this year.