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HSBC says tech firms may face more regulation on banking services
[LONDON] Regulators are looking more closely at whether technology companies that provide financial services should be supervised more heavily like banks, the chairman of Europe's biggest lender, HSBC, said.
As more technology companies offer financial services or help customers conduct payments it has raised questions on how far into banking firms like Apple and Alibaba may go, and how far they should be regulated. "Regulators all around the world are reflecting on the extent to which Internet companies are conducting banking business and at which point they should be licensed as banks, or whether they are simply providing a payment mechanism or some kind of application that facilitates access to banking," HSBC Chairman Douglas Flint said late on Thursday.
He said he expected most technology companies would partner with banks to avoid the cost and burden of compliance and regulation, such as 'know your customer', or KYC rules. "The burden of KYC and so on is a significant overhead which tech companies are not rushing to take on," Mr Flint said.
Mr Flint said he expects technology firms to play an increasingly significant, and positive, role in banking. "The tech industry has an enormous contribution to make to the modernisation and efficiency of the banking industry and give customers the service proposition they want, but there are issues on the way." One potential problem was how customers' financial data is used. "There has to be debate and clarity and transparency on who owns the data, where's it held, how secure is it and whose responsibility is it when it goes wrong. "The richness of financial data is why many tech companies want to get into payment services, and you're all going to have to make choices at some point on how much of your payment flow information you want to share," he said.
Mr Flint, speaking at an event about banks in China, was responding to a question about competition from the likes of Alibaba and Tencent.
He declined to comment on HSBC's review of whether to move its headquarters to Hong Kong or elsewhere from London. The bank is reviewing its domicile, and said it will make a decision by the end of this year.