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Regulation coming for technology groups offering financial services, says head of HSBC

Regulators around the world are looking at whether more regulation is needed for technology companies offering financial services, the chairman of HSBC said during a speech reported by the Financial Times21 Sep 2015

Speaking to Cass business school in London, Douglas Flint said that regulators are "reflecting on the extent that internet companies are providing banking services and whether they should be regulated as such, or whether they are just providing access to banking services," the Financial Times said.

Most technology companies are likely to choose to partner with banks, rather than take on compliance and anti-money laundering regulation themselves, Flint said.

Regulators should also look at the use of consumers' financial data by these companies, Flint said.

"The big public policy question that you all should be thinking about is who owns your data, how safe is it and who is responsible if it goes wrong. The richness of this data is really valuable and that value exchange is something that public policymakers will have to think about," he said, according to the report.

Financial services technology expert Angus McFadyen of Pinsent Masons, the law firm behind Out-Law.com, said: "In the UK and across Europe there have been legislative drives to support technology focused services in the sector. Regulation is changing to force banks and other payments firms to work with organisations that provide platforms that aggregate statement data and also enable payments to be initiated remotely."

"The technology organisations that perform these activities will be subject to a new, relatively light authorisation regime and a defined liability regime that they need to support with capital or insurance," said McFadyen.

Chinese e-commerce giant Alibaba was given regulatory permission to open a private online bank called Mybank in June, while WEbank, another online only bank, opened in China in January.

Mobile services providers including Apple and Google have also been working on mobile payment services. 

The finance arm of China’s Alibaba Group, the Ant Financial Services Group, launched a credit-scoring service in February to draw on “big data technology and customer behaviour analytics, to help make credit more available to millions of consumers across China”.