Internet giants such as Alipay, Amazon pose existential threat to banks, says Bank for International Settlements chief

Internet and “big data” giants like Amazon.com and China’s Alipay pose an existential threat to traditional banks, the head of the Bank for International Settlements, Agustín Carstens, said on Tuesday.

Carstens, who took charge of the central bank umbrella group a year ago, said the huge amounts of data that big internet companies gather on their customers meant they potentially have advantages over established banks.

They may have better information on customers’ spending and lifestyles, which might make it easier to judge the risks of providing a loan.

“This is very big,” Carstens, who was previously governor of Mexico’s central bank, said on the sidelines of a banking conference in London where he spoke on the growing influence of big data.

“This can be an existential threat to some financial intermediation firms so it is very important for us to get all of this early on and try to steer it without distortions.”

Alipay, the payments unit of Ant Financial Services, is already catching up with HSBC in terms of market capitalisation. The growth of Alipay and companies like Tencent Holdings has prompted Chinese regulators to take steps to be able to monitor them more closely.

Ant Financial is an affiliate of Alibaba Group Holding, which is the parent company of the South China Morning Post.