LONDON—Rapid action is needed to update how cross-border financial services are scrutinized and consumers protected as the sector becomes digitalized with “Big Tech” playing an increased role, European Union regulators said on Monday. People are turning to social media and using smartphones to buy and sell shares, move money around bank accounts and make payments, a trend accelerated by the COVID-19 pandemic, leaving regulators playing catch-up. “Digital finance has unlocked new synergies between financial and non-financial activities that potentially introduce systemic risk into the market for financial services,” a joint report from the EU’s banking, insurance, and markets watchdogs said. Cloud computing, or banks and other financial firms using outsourced providers for services, is booming, the report said. It is sometimes unclear how to categorize some digital financial services under existing rules, creating uncertainty over data privacy, anti-money laundering safeguards, and how much capital they should be holding, the report …