Three types of digital platforms are expanding in financial services: (i) fintech entrants;
(ii) big tech firms; and (iii) increasingly, incumbent financial institutions with platformbased business models. These platforms can dramatically lower costs and thereby aid
financial inclusion – but these same features can give rise to digital monopolies and
oligopolies. Digital platforms operate in multi-sided markets, and rely crucially on big
data. This leads to specific network effects, returns to scale and scope, and policy tradeoffs. To reap the benefits of platforms while mitigating risks, policy makers can: (i) apply
existing financial, antitrust and privacy regulations, (ii) adapt old and adopt new
regulations, combining an activity and entity-based approach, and/or (iii) provide new
public infrastructures, such as digital identity and retail fast payment systems. These
public infrastructures, as well as ex ante competition rules and data portability, are
particularly promising. Yet to achieve their policy goals, central banks and financial
regulators need to coordinate with competition and data protection authorities.