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Comment For all their differences, big tech companies have one thing in common: they don’t like to stay on their laurels.
We’ve lived with Apple, Google, and Amazon for more than 20 years, and we’ve lived with Facebook for less than 20 years, each with a different purpose.
Cloud services, e-commerce, hardware, and advertising have sprung up in various ways to displace original businesses, and in recent years, the news has shifted to whether or not large-scale technology is seeking to enter the financial services space.
You may not post checks to Google Bank, Apple or Amazon anytime soon, but that doesn’t mean they don’t use their branded services. And unlike real players in the banking and financial spheres, some analysts say that big technology can benefit without taking risks.
Silicon Valley is never needed and getting a banking license is not a heart attack
Apple, like Amazon, has a credit card. Those two, and Google and Facebook, also provide payment services, although there is no hassle or regulation of providing checking and savings accounts.
One of the closest FAANG companies to the bank was Google Play (not a media stream), which provided checking and savings accounts as well as physical debit cards. The idea was canceled in October 2021 due to several missed deadlines and the departure of the project’s Google Pay executive. Wall Street Journal Reported.
Like other US technology companies, Plex relies on partner banks to provide accurate financial law and risk estimates in the role of Google’s ordinary service provider.
Amazon also intended to provide checking accounts, but dropped it.
The same cannot be said for Chinese and Singapore tech companies. Alibaba founder Jack Ma Ant Group was granted a wholesale license in Singapore earlier this month, enabling the company to do business with large corporations and other financial institutions.
A.D. By 2020, technology company Bahir and Ride-Power Up Greb are both fully licensed digital banking from Singapore, allowing them to provide services to consumers.
“They are the main payment providers in China’s largest technology companies,” said Andrew Steadman, Gartner’s chief financial officer. The record. Consider Stademan, WeChat and Alipay, which control more than 90 percent of third-party mobile payments in China.
In this case, it is significant that Chinese technology companies are seeking banking licenses – Mas Ant Group was sought and awarded in China last year, but things did not go well.
“China and the United States are simply not the same place, and the events there are not necessarily the same as the actions of American technology companies,” Steman said. “Does Apple really need a banking license? I honestly don’t know. But will it be reduced from their core business? Maybe.”
The future of Fintech is ecology
U.S. banking regulations, like other U.S. legal structures, are complex and divided between state and federal governments. It takes more than a year to become a licensed banker and costs more than a million dollars depending on the type of license. Technology companies operating across the country require a national license approved by the Office of the Superintendent, which can be expensive.
“There’s a huge investment in money and time. It’s not like I can do a lot of money next week. I have to build these processes, structures to comply – all of these things,” Steadman says. .
“You can also consider how much supervisors focus on big technology,” says Steman. I think regulators might go in and say, “Sorry, we don’t even allow this.” Governments may not be happy about this.
Think Amazon is one of the largest companies in the world, and accounted for 41 percent of ecommerce sales in the United States alone in 2021, in October of that year. Amazon offers not only the eCommerce platform but also the largest financial services among US technology giants. If any company is ready to apply for a bank license, it could be Amazon.
Alex Rampell, co-founder of Andresen Horowitz, seems to agree.
“Amazon is scary. If Amazon gets a low debt or gives you a bank account, you will buy more things on Amazon,” Rampel said in 2017.
But CB Insights does not think Amazon is entering the bank, and the findings make it difficult to ask. Like other technology companies, CBB Insights said of Amazon: “The company is focused on building financial services that support its main strategic goal: to increase participation in the Amazon ecosystem.”
Google, Apple, Facebook and Amazon all control ecosystems for payment for products and services – why complicate matters when there are so many banking partners?
When Google Plus was canceled in 2021, a spokesman for Google told Engditt that it would focus on digital enabling banks rather than selling the services themselves. “This is the best way to help Google users get better financial services and the financial services ecosystem to connect more effectively with their customers in a digital environment,” the spokesman said at the time.
Google’s statement echoes what Steadman said. “With Apple’s Wallet or Amazon merchant platforms, technology companies have the ability to work with financial institutions to launch a business model using a different model,” he said.
Financial institutions can view the proceeds of a partnership with tech companies as a new source of income, Steman said. The recordAnd it’s very different from the way banks used to create their licenses in the past.
Stademan believes the partnership between financial companies and technology companies is truly valuable, and said banks are beginning to realize this. “When you understand what works in both ways, we see more of the relationship between financial institutions and big technology.”
At the end of the day, technology companies want things to be free of conflict and easy for their users to avoid. Open banking strategies for accessing banking information by third parties, such as Google, have been around for years, and are especially popular in the US, where users are more willing to provide personal information.
“The big issue is the inclusion of financial services in the consumer space,” says Steman. In other words, don’t expect Amazon to ask you to open a checking account – technology companies are ready to take the lead for your financial institution.
One day may come – soon – it will be another way for banks to simply disappear into the background of “everything as a service”, without compromising the ecosystem of your choice. ®
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