CrackitToday App

Big Techs

Big Techs:

Report by Reserve Bank of India (RBI), large non-financial technology firms, referred to as “big techs,” pose challenges to financial stability owing to their technological advantages, large user base, wide-spread use by financial institutions and network-effects.

  • Big techs include companies such as Alibaba, Amazon, Facebook, Google, and Tencent.
  • They usually hold service licenses through subsidiaries or Joint Ventures with varying levels of ownership control and jurisdictional regulatory advantages.
  • Big techs, given their pervasive adoption as third-party service providers, generally become the underlying platform on which a host of services are offered.
  • This uniquely positions the big techs to easily acquire cross-functional databases which can be exploited for generating innovative product offerings, making them dominant players in the market.
  • The pervasiveness of big techs provides them with a large client base who are entrenched in using their platforms/ products with access to multiple facets of customers’ data, generating strong network effects.
  • The entry of big techs into finance also reflects strong complementarities between financial services and their core non-financial services.
  • Besides the technological advantages, the big techs typically also have the financial muscle to withstand the competitive pressures.