Cross-selling and embedded finance models may raise anti-competition concerns: RBI report

Even as cross-selling and embedded finance models enhance customer convenience, they may raise anti-competition concerns due to bundled services, cautioned the RBI in a report.

Embedded finance refers to the integration of banking and various financial services into non-financial applications and services.

Cross-selling involves suggesting related or complementary products to existing customers and leveraging established relationships to offer additional items or services aligned with their needs or previous purchases.

Data collection by big tech

“Collection of extensive data by Big Tech can be utilised to favour their own products, obtaining higher margins by making financial institutions’ access to prospective clients via their platforms, engaging in product bundling and cross-subsidising activities. This can give rise to adverse economic and welfare outcomes,” per RBI’s Report on Currency and Finance.

Last year, Deputy Governor M Rajeshwar Rao cautioned that digitalisation is giving rise to certain ‘invisible risks’ or ‘dark patterns’, whereby consumers are tricked into making decisions detrimental to their interests.

“The use of extensive customer data by companies raises concerns about data protection and privacy, potentially compromising customer trust and security,” the International Monetary Fund observed in 2021.

“In India, three-fourths of the business-to-consumer (B2C) funded FinTech applications request permission to access camera, photo/media/files, location and storage for using applications,” the report said.