Big Tech Banking

37 Pages Posted: 20 Dec 2018

Date Written: December 4, 2018


In this paper we explore the likely implications of the entry of Big Tech platforms into retail banking and the appropriate response of regulators and policy makers to this new industry development. We find that the entry of Big Tech platforms may transform the banking industry in radical ways: while it may possibly increase competition to the benefit of consumers in the short term, within a few years Big Tech companies may succeed in monopolizing the origination and distribution of loans to consumers and SMEs, forcing traditional banks to become “low cost manufacturers,” which merely fund the loans intermediated by the Big Techs. This may harm competition, reduce consumer welfare and bring about an increase in financial instability in the medium or long term. We discuss alternative policy responses aimed at maximising the positive impact on consumer welfare of Big Tech entry, while limiting the risk of monopolization as well as the potential adverse implications of such entry on market integrity and financial stability.

Keywords: Banks, Big Tech, Competition Policy, Consumer Lending, Consumer Welfare, Data Sharing and Portability, Financial Stability, FinTech, Market Integrity, Platforms, Privacy, Regulation, Retail Banking, SME Lending

JEL Classification: G21, G28, K20, L41

Suggested Citation

Padilla, Jorge and de la Mano, Miguel, Big Tech Banking (December 4, 2018). Available at SSRN: or

Jorge Padilla (Contact Author)

Compass Lexecon ( email )

Paseo de la Castellana 7
Madrid, 28046

Miguel De la Mano

Compass Lexecon ( email )

23 Square de Meeus
Bruxelles, 1000

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