Central banks across the globe have been encouraged to take a leading role in stimulating digital financial systems but also keeping up with innovations.
As part of the ongoing Annual Meetings of World Bank Group and International Monetary Fund, central bank representatives attended a seminar of ‘Big Tech and the Future of Finance’.
During this seminar, a panel of business, technology and thought leaders discussed opportunities and challenges of technology in finance.
Panelists also recognized the potential role of Big Tech in driving important change in the financial services industry, including through its ability to scale basic financial services at a low cost.
In his submission at the seminar, David Marcus, the head of Calibra, Facebook’s digital wallet said, he growing Technology offers a way to even the playing field.
He said that before the arrival of internet, people used to pay up to a dollar a minute for an international call and 15 or 20 cents a text message and suddenly with the internet we can now communicate for free with a $30 Android device.
“When you think about money it really hasn’t evolved the same way. And, the same person with the $30 Android device doesn’t have access to digital money at all. If anything, the poorer you are, the more you are paying for financial services,” said Marcus.
Another concern at the seminar was whether technology companies would be subjected to the same rules that regulate banks.
Bank of England Governor Mark Carney said “the answer is yes. Same risks, same rules. One of the important things when we get into payments for example is, and what we’re realizing as regulators is that you need to look at the ecosystem as a whole.”
“So, not just a narrowly defined slice of the payment system, because it is in many respects all interconnected,” Governor Carney explained.
Meanwhile, for Nandan Nilekani, Co-Founder and Chairman of Infosys Technologies Limited, payment is so fundamental to an economy that you need an interoperable payment system, which is very, very critical.
“The other point is cross-border remittance which is a huge challenge. Today, the world has $689 billion of cross-border remittance from 230 million migrants,” said Nilekani.
Panelists agreed that the current financial system needed to evolve. They highlighted that financial service consumers, across both developing and advanced economies, face significant costs and inefficiencies, as well as other limitations to accessing finance.
Experts at the seminar also agreed that there is a need to ensure that consumers could fully benefit from the technologies, including through the interoperability of Big Tech financial services.
However, Panelists said there risks that new entrants may bring, including reduced competition, given Big Tech’s already established large customer bases, as well as financial stability, consumer protection, and data privacy concerns.
This annual meeting (14-20th October) is a platform that brings together Boards of Governors of the World Bank Group (WBG) and the International Monetary Fund (IMF) to discuss the work of their respective institutions.
Also featured are seminars, regional briefings, press conferences, and many other events focused on the global economy, international development, and the world’s financial markets.
This meeting also attracts central bankers, ministers of finance and development, private sector executives, representatives from civil society organizations and academics to discuss issues of global concern, including the world economic outlook, poverty eradication, economic development, and aid effectiveness.