To the layman, “systemically important” sounds like a compliment, but bankers know it’s a label with a lot of baggage. And it now describes large technology companies such as Google and Apple, according to a new report.

“Financial institutions increasingly resemble, and are dependent on, large tech firms to acquire critical infrastructure and differentiating technologies,” says the report, published Tuesday by the World Economic Forum.

For example, Amazon Web Services is on its way to becoming “the backbone of the financial services ecosystem,” the report says, with everyone from JPMorgan Chase to Xignite, a company that makes market data application programming interfaces, using Amazon’s cloud service for data storage and processing. Meanwhile, JPMorgan itself is reportedly investing in a customer relationship management and analytics system for institutional clients that, like Amazon, would suggest trades based on past behavior.

Despite using the provocative phrase “systemically important techs,” the report stops well short of calling for regulatory changes. “It is a play on words, intentionally so,” said Jesse McWaters, the WEF’s project lead for disruptive innovation in financial services. He stressed that the line in the nearly 200-page report is not a call for branding any tech companies systemically important financial institutions, which he said he did not think would be appropriate.

However, the increasing interconnectedness between financial institutions and tech companies creates new operational risks — consider the AWS outage in May — and “may require a consideration of things like know-your-vendor rules,” McWaters said.

Attendees walk past a signage for Amazon Web Services (AWS) Summit in San Francisco, California, U.S., on Wednesday, April 19, 2017. Amazon.com Inc. Web Services chief executive officer Andy Jassy is leading a push into artificial intelligence to boost Amazon's cloud computing, which commands about 45 percent of the market for infrastructure as a service, where companies buy basic computing and storage power from the cloud. Photographer: David Paul Morris/Bloomberg
Amazon Web Services is on its way to becoming “the backbone of the financial services ecosystem,” says a new report from the World Economic Forum.

The growing linkages between the financial and tech sectors are difficult to avoid but may be a hard pill for institutions to swallow, according to the report.

“All financial institutions will need to find ways to partner with large techs without losing their core value proposition,” it says. The problem is that dependency on Silicon Valley “necessitates the loss of some control over both costs and data.”

Trying to maintain that control could backfire. “Incumbents risk falling far behind on technological offerings if they minimize engagement with large techs to protect independence,” warned the WEF, which puts on the annual winter gathering of global muckety-mucks in Davos, Switzerland.

The one clear group of winners may be STEM graduates. “Incumbents will have to compete with large techs for talent, driving up the cost of technology talent,” the report says.

The report, “Beyond Fintech: A Pragmatic Assessment Of Disruptive Potential In Financial Services,” covers a host of sectors, from payments to asset management to insurance to securities. It was prepared with the consulting firm Deloitte. You can read it here.