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Opinion
Andy Mukherjee

Is the Next Financial Crisis Coded in Tech’s DNA?

Central banks need to regulate aspects of the consumer internet or watch stablecoins and other digital innovations become too big to fail.

Could Big Tech’s DNA be the root of the next financial crisis?

Could Big Tech’s DNA be the root of the next financial crisis?

Photographer: MR.Cole_Photographer/Moment RF

Why should banking watchdogs worry about the consumer internet? The answer, as researchers have been warning for some time, lies in their “DNA loop,” shorthand for data, network, activity. It’s a powerful circuit, which regulators must be prepared to break if they want to stop the next financial crisis in time. 

The original data about consumers may come from e-commerce, social media or online searches; nothing to do with money. But in an ever-expanding successful network, it becomes easy to mine disparate bits of information to map users’ repayment behavior, and set up lending operations to exploit that knowledge. User activity on payment and loan platforms generates yet more data.