Initially, there could be benefits for consumers, such as lower prices, by driving existing providers to be more competitive. By using their own data and leveraging artificial intelligence, it could also lead to the development of more innovate products. The application of more data would lead to greater efficiency for lenders, as well as allowing consumers to make more informed financial decisions.
In the long term, the FCA predicts that large technology companies could adversely affect competition in the market. The potential risk is that they will gain power by leveraging their user base and direct them towards particular products. By limiting access to certain products by actively promoting some, or giving consumers favourable terms on their own products, it could lead to higher prices and the growth of inferior products in the market. If technology companies gained control of a significant share of consumer credit it could affect credit risk and affordability assessments.
While technology companies have not taken these steps yet, the FCA will continue to monitor the situation closely. They are also looking at developing its regulatory approach in response to feedback from its paper on the situation, so that the industry is better prepared for such a shift in lending providers.