The gradual shift of BigTech giants into financial services has the potential to be a “game changing development” for the industry, according to a new report from the Bank for International Settlements (BIS).

The Basel-based institution, which sets out policy and banking services for the world’s central banks, conducted a study into the entry of big technology companies into financial services, which found that regions with “less stringent” banking regulation - including China and Latin America - are ahead of Europe and the United States when it comes to credit services.

The report focused on the growth of China’s Ant Financial, the payments and finance arm of e-commerce giant Alibaba, and Argentina’s online marketplace Mercado Libre, which has launched its own financial services offering.

The analysis, based on data obtained from BigTech firms in these markets, sheds light on key questions about “this potentially game-changing development in the world of finance”.

The report comes after Apple announced plans to launch its own credit card service in addition to the Apple Pay digital wallet.

The BIS also described the trend for BigTech or e-commerce firms to begin their financial services offering with payments and then progress into more complex products.

“BigTech firms often start with payments,” the report explained. “Thereafter, some expand into the provision of credit, insurance, and savings and investment products, either directly or in cooperation with financial institution partners.”

However, while the BIS acknowledged that BigTech presents challenges for the traditional banking and regulatory model, it concluded that there was more time was needed to examine the wider impact as consumers adopt BigTech financial services in greater numbers.

“It is too early to judge the extent of BigTech's eventual advance into the provision of financial services,” the report stated. “However, the early evidence allows us to pose pertinent questions that bear on their impact on financial stability and overall economic welfare.”

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