Big Tech Companies in Banking: A Diverse and Inevitable Approach to Financial Services

The entry of Big Tech companies into the world of banking and financial services has been a long time coming. Companies like Apple, Google, Amazon, Facebook, Alibaba, and Tencent have been slowly expanding their reach into the financial sector, leveraging their vast resources and technological prowess.

Interestingly, their approach to financial services has been as diverse as their businesses, with each company focusing on different aspects of the financial ecosystem. This article delves into the strategies of these Big Tech companies in financial services and explores the potential impact on traditional banks, customer preferences, and the financial landscape as a whole.

Big Tech Companies and Their Approaches to Financial Services:

1. Apple: Payments and Cards Apple has chosen to focus on payments with Apple Pay, a mobile wallet service that allows users to make secure transactions using their iPhone, iPad, or Apple Watch. In addition, Apple has partnered with Goldman Sachs to launch the Apple Card, a credit card designed to work seamlessly with Apple Pay and offer a range of benefits to users, such as cashback on Apple products and services.
2. Google: Current Accounts and Partnerships Google has taken a different approach, looking at current accounts through partnerships with established financial institutions like Citi. This strategy allows Google to leverage the expertise and regulatory framework of traditional banks while providing an enhanced user experience through Google’s technology.
3. Facebook: Digital Currency Facebook has opted for the digital currency route with the launch of its cryptocurrency, Diem (previously known as Libra). The goal of Diem is to create a global digital currency that offers users a fast, low-cost, and secure way to make transactions and store value.
4. Amazon: A Comprehensive Financial Ecosystem Amazon’s approach to financial services is perhaps the most ambitious, as the company seems to be slowly picking off every part of the financial ecosystem. With products like Amazon Pay, Amazon Lending, and the Amazon Credit Builder Card, the company is moving toward creating an all-encompassing financial platform. It wouldn’t be surprising to see the emergence of an “Amazon Prime Bank” in the future.

The Future Role of Traditional Banks:

As Big Tech companies continue to encroach on the territory of traditional banks, questions arise regarding the future role of banks in the financial landscape. Some believe that banks will always have a place alongside or behind tech companies, providing the necessary infrastructure and regulatory compliance. Others argue that banks will need to adapt by embracing technology and becoming more customer-centric to survive.

Customer Preferences and Trust:

Whether customers will want to bank with Big Tech companies largely depends on their trust in these organizations. While some may prefer the convenience and innovation offered by Big Tech, others might be skeptical due to concerns about data privacy and security. Ultimately, the success of Big Tech in banking will hinge on its ability to demonstrate transparency and protect customer data.

Left-Field Quasi-Tech Players:

It’s also worth considering the potential impact of non-traditional players like Nike, McDonald’s, Starbucks, and Coca-Cola on the financial services industry. These companies have already shown an interest in financial services through initiatives like Starbucks’ mobile payment app and Coca-Cola’s investment in digital wallet company, Mobikwik. As the line between technology and finance continues to blur, these quasi-tech players may find unique opportunities to expand their business models and provide additional value to their customers.

Conclusion:

The entrance of Big Tech into the banking sector is both inevitable and diverse. As these companies continue to make strides in financial services, traditional banks will need to adapt and evolve to stay competitive. Customer trust and preferences will play a significant role in determining the success of Big Tech’s foray into banking, and non-traditional players may also find unique opportunities to