July 18, 2024

All Big Tech Giants to continue pushing deeper into Financial services without being termed as Banks

  • All bigger Tech giants right from Google to Apple are in the pursuit of taking on the fight to be one amongst the lead financial industry.
  • The previous year, Apple as well entered the financial industry with its credit card and Google is also setting its eyes for launching in the consumer bank accounts.
  • However, all Big Tech companies share a common idea of not being regulated as a core Bank sector.

All the tech giants are in contention for getting into the core banking arena this year, while not to be termed as core ‘Bank Sector’.

In the close association with Citibank and a California backed credit union, Google is planning something huge that means to introduce consumer bank accounts later in 2020 through its wholly backed digitalized layer known as ‘G-Pay or Google Pay’. The tech giant also assures of stepping up off getting hold on financial know-how of all its partners.

The previous year saw Apple- the biggest tech giant to have debuted as into a maiden credit card partnership with Goldman Sachs-the banking premier, and unlike Google Inc., it also had provided all the financial know-how and legal works with the banking partner in designing the card and joining it via its digital wallet App Apple-pay.

Although their products and services quite differ in their financial services and magnitude of their global presence, both firms share something in common: – of their no plan attitude of being certified as full term regulated financial institutions unlike the Citi group or Goldman Sachs.

As per the words stated by Sarah Kocianski, head of research at fintech consultancy 11:FS “There is no doubt that in the near future Big Tech- a group of globally renowned tech and social media stalwarts like Google, Amazon, Apple and Facebook will be seeking to unearth and push deeper into the financial arena, their overall progress in Banking arena will be that of slow creeping nature instead of big developmental strides.”

She also further added that “as stated earlier the Big Tech giants will be seeking harder to add financial services to banking peripheral and extend their small yet valuable offerings, without invariably venturing into Banking sector as it requires acquiring, maintaining banking licence and a big headache of holding periodic book of accounts as well as renewing the licence and they are thus, big risk taking initiatives for these firms. Instead, they are just contented to be their licensed partners.”

The race to providing new digital bank licences and territory have heated up. The otherwise slow European Union have aplenty of digital banks from Monzo to N26 that have emerged, having the bulk of its target audiences in form of young tech-savvy consumers. The Singapore and Hong Kong as well are in the process of getting introduced latest digital bank licenses for all tech businesses for offering financial services.

Other tech giants taking over finance

In Facebook’s case, the social media firm wants to introduce a digital currency that creates global payments cheaper and faster. Called libra, the virtual token would be tied to a basket of currencies and government debt, however it’s drawn regulatory pushback thanks to concerns it could hurt the monetary sovereignty of major world economies.

The firm has been urged by President Donald Trump to hunt a federal charter before going ahead with the project. Such a process, for any tech company, would be tedious given how complicated it’s already for fintech start-ups to get banking licenses within the U.S. Still, Facebook’s experiment has the potential to offer major banks a run their money.

Simon Taylor, co-founder and blockchain lead at 11:FS “The theory goes that if 2 billion people were to withdraw their deposits from the banking industry and move them into Libra tokens, you’d effectively have a run on the banks.”

Aside from libra, Facebook is additionally consolidating its payment products under a replacement brand called Facebook Pay. Uber, like its Southeast Asian competitor Grab, is moving further into finance with a division called Uber Money that houses a digital wallet and upgraded payment cards. They’ll face competition from the likes of Google Pay and Apple Pay within the U.S. and Chinese payment apps like Alipay and WeChat Pay.

Then there’s Amazon, which is already within the business of business lending, but hasn’t yet made a raid consumer banking. the corporate also found out a student loan scheme in 2016 with Wells Fargo, which shuttered shortly after being introduced, although Kocianski noted there was “every reason to suspect they’ve learned from that.” The firm was reported to be in talks with the likes of J.P. Morgan about launching its own checking accounts, though it’s still not clear whether which will ever happen.



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