European entities study measures to compete with bigtech. The banking system "is characterized by high competition among its components," but they recognize that some entities study alliances (joint ventures) and joint investments related to new technologies or new business models. Banks aspire to solve one of their biggest disadvantages with respect to giants like Apple, Google or Amazon: the investment power.
Joint projects
The bankers considered the advantage of joining two or more banking groups in the same project: the available resources would be greater and, therefore, it would be possible to "reduce the capacity differential" that the sector suffers from the large global technological platforms, they add.
The bank also plans to make a more intense exploitation of "existing bank data", according to these sources in the sector. One of the strengths of Google or Facebook is the ability to handle massive amounts of information from its users (big data), which allows them to extract predictions and market trends.
In the banking sector, despite not having such massive databases, they recognize that there is even more valuable information that has not been used in full capacity.
Some banks will explore a third measure to plant the battle of the big techs by negotiating the sale of their banking services to global platforms. That is, act as suppliers jointly to gain weight with respect to the big ones in the technology sector. This option would allow grouping the supply of banks and discourage the ability of digital giants to develop a dominant position.
The Spanish banking sector also trusts that European regulators will meet in the coming months their demand to soften the regulatory treatment that technology and software investment has for entities.
Technology investment
The rule still in force requires that intangible assets be deducted from capital ratios. That is to say, the investment in technology drains, in practice, solvency of the entities, which implies, according to the sector, a disincentive to digital transformation strategies.
European banks as a whole, and especially Spanish banks, have been lobbying for years to convince European authorities to adopt a regulatory model similar to that of the United States in this type of intangible assets. In essence, the regulator would consider that a part of the software investment has an intrinsic value that would not be affected by insolvency, so that it would not have to be fully deducted from the regulatory capital ratios.
A report by the UBS investment bank that analyzes this possibility estimates that the gain of the highest quality capital ratios could exceed 20 basis points for Santander and BBVA.
Industry sources indicate that the reception of the proposal by the authorities has been favorable. This is not the only positive note that regulators and supervisors threw at traditional banking.
The AEB Digital Committee found that the position of the global authorities regarding the entry of technology giants into the banking sector "significantly hardened" so far this year, according to sources close to it.
This is the case, for example, of the Financial Stability Council (FSB), which in February demanded to raise vigilance over the bigtech that provide or plan to provide banking services, due to its potential impact on global finance and stability.
More recently, on June 8, the International Monetary Fund (IMF) warned of the potential "disruption" that these tech giants will likely cause when they decide to compete, leveraged on "their huge customer bases and their wallets full of money to offer financial products based on big data and artificial intelligence. "
Despite the promise of financial modernization and inclusion that they bring, the IMF believes that there is a real danger of market concentration that could lead to a more vulnerable financial system in the medium and long term.
Source link
https://www.cronista.com/finanzasmercados/Los-bancos-planean-alianzas-para-defenderse-de-Apple-y-Facebook-20190819-0010.html
