Big Tech Acting Like Banks Should Face Same Rules, Germany Says

(Bloomberg) -- Germany has a message for big tech companies: Get ready to be regulated if you want to offer banking services.

“It’s really, really important” to ensure a level playing field between banks and new competitors, Deputy Finance Minister Joerg Kukies said at a conference in Frankfurt on Monday. “That means the big tech firms also need to open their interfaces to guarantee fair competition and innovation.”

Large technology companies like Apple Inc. and Google parent Alphabet Inc. are increasingly offering financial services like payments and will explore whether to include checking accounts as they seek to boost revenue, and gain greater access to the data that is at the heart of their business models. That added competition is one more headache for Kukies and the other stewards of Germany’s banking industry as it grapples with antiquated IT and sub-par profitability.

“We’re totally OK with big technology companies like Apple Pay and GooglePay offering services,” said Kukies. “But we also find it quite correct that the German parliament last week created the prerequisites for competition being preserved on these platforms.”

Kukies was referring to a section of a wider legislative package on preventing money laundering that would force phone makers to give banks access to a chip on the device when offering mobile payments.

Apple shot back, saying the legislation could damage user experience and compromise the security of financial data.

Kukies’ comments are part of a larger drive by Finance Minister Olaf Scholz to eliminate what he sees as structural disadvantages to German banks. Two weeks ago, the ministry unveiled a plan to break the impasse to a more integrated European banking market that would help banks expand across the currently fragmented bloc.

Kukies said that a so-called digital union feeds into that objective and that Germany’s initiative on technology companies would be compatible with European Union law, once there is one.

“The same business, with the same risk, needs an equivalent regulation and supervision,” Kukies said. “That means we can’t just subject banks to know your customer, anti-money laundering and other important regulations, but that these regulations need to be applied fairly and equally to all.”