This paper considers the financial stability risks caused by BigTech’s entry into retail
banking and discusses alternative policy responses aimed at allaying those concerns.
The entry of BigTech platforms may transform the retail banking industry in radical
ways: while it may spur much-needed competition in the short term, it may also
increase financial instability and lead to even more concentrated credit markets in
the long-term. Importantly, traditional banks may be forced to transform into “narrow
banks”, limited to funding the loans originated and distributed by the BigTechs. The
separation between origination and funding has proved problematic once and again,
from the savings and loans (S&L) crisis of the 80s and 90s to the financial collapse
of the Great Recession. This time need not be different. Whether this grim prospect
materialises, though, will depend on several factors, including how regulators
respond to the new challenges posed by the entry of BigTech “banks”.
Artículo de revista
Revista de estabilidad financiera. Nº 38 (primavera 2020), p. 9-26