Big tech giants like Facebook are rapidly entering the financial services market without ensuring that consumers are properly protected or that they’re compliant with applicable regulations. This trend is worrying given these companies’ size, the amount of consumer data they own, and, in Facebook’s case, its history of privacy violations. Keeping big tech companies out of banking is an important check against these companies becoming “too big to fail,” using their user data to boost their banking businesses, or morphing into monopolies that control too many aspects of consumers’ lives.
Barring big U.S. tech companies from entering the banking sector is likely to cause the U.S. to fall behind in cryptocurrency and digital payments, ceding this important aspect of the future global economy to competitors like China. The supposed appropriate separation between banking and commerce is an artificial product of lobbying by the banking industry, and doesn’t need to be preserved to keep consumers safe. Regulators should allow anyone — including big tech companies like Facebook — who wants to innovate in the payments space to do so.