*When Finance Meets Big Data**
*
/As FinTech scrambles to capture the African market, more regulation and
public ownership is needed//
/
Fabio De Masi (per la Rosa Luxemburg Stiftung)
/PDF scaricabile da questa pagina:
https://www.rosalux.de/en/publication/id/50039/when-finance-meets-big-data/
<https://www.rosalux.de/en/publication/id/50039/when-finance-meets-big-data>
Big Tech corporations like Amazon, Apple, Meta/Facebook,
Alphabet/Google, or Alibaba have their sights set on financial markets
and so-called “underbanked people”. Big Tech companies work with large
datasets, also known as Big Data. Should “Big Data meet Big Finance”,
megacorporations with unprecedented market and data power may emerge.
Money is key to so-called “economic development”, i.e. the financing of
investment as well as participation in the economy. Large parts of the
global population — especially on the African continent and further in
the informal sector — are excluded from the traditional banking system
because they have no regular income or can hardly build up savings.
Financial technology (FinTech) corporations, in turn, promise financial
inclusion for “underbanked people”.
When Finance Meets Big Data: Financial Technology and the Scramble for
Africa reviews the economics of Big Data in the finance sector and
subsequently analyses the role of money for investment and the effects
of FinTech companies on the monetary system. The publication then
discusses the special role of the FinTech sector in Africa. The FinTech
business landscapes of two of the biggest Sub-Saharan FinTech Economies
— Kenya and South Africa — is briefly assessed and the role of FinTech
in economic betterment and poverty reduction critically reviewed.
Finally, the study discusses risks to political and economic
sovereignty. The study concludes with some preliminary recommendations
of political strategies to counter the overconcentration of data and
financial power.
In Sub-Saharan Africa, FinTech platforms such as M-Pesa capitalize on
millions of unbanked people in the informal sector. While many
multilateral organizations embrace development through corporate-led
financial inclusion, some economists criticize value extraction from
poor communities by FinTech corporations through high interest rates and
service fees (“digital colonialism”).
The study finds that basic phone banking has facilitated financial
access for the unbanked population in Kenya. However, M-Pesa is still
highly concentrated on urban areas and extracts exorbitant fees from
poor people. Mobile money finances consumer debt rather than sustaining
investment into the productive capacity of previously unbanked people.
In South Africa, digital banking has advanced but likewise with little
impact on investment.
African countries should strengthen data protection and public ownership
in the telecommunications sector, as well as enforce antitrust
legislation and regulate FinTech to at least the same extent as the
banks. Another option could be to tax local data mining. Further, cash
payments for smaller amounts should be protected and Central Bank
Digital Currencies (CBDC) considered as a means of offering financial
technology as a public good.
_______________________________________________
nexa mailing list
[email protected]
https://server-nexa.polito.it/cgi-bin/mailman/listinfo/nexa
