Big tech finance companies are one step ahead of regulators

Innovation by companies such as Amazon, Alibaba and Tencent presents big challenges

In 2009, in the midst of the global financial crisis, Paul Volcker, the former Federal Reserve chair, famously observed that the only socially productive financial innovation of the preceding 20 years was the automated teller machine. One wonders what Volcker would make of the tsunami of digitally enabled financial innovations today, from mobile payment platforms to internet banking and peer-to-peer lending.

Volcker might be reassured: like the humble ATM, many of these innovations have tangible benefits in terms of lowering transactions costs. But as a critic of big financial firms, Volcker presumably also would worry about the entry of some very large technology companies into the sector. Their names are as familiar as their services are ubiquitous: Amazon in the US, the messaging company Kakao in Korea, the online auction and commerce platform Mercado Libre in Latin America, and the Chinese technology companies Alibaba and Tencent.