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NEWS ANALYSIS
Over the top - how Google, Amazon and Apple will take on fintech
SeniorEditor Bill Boyle
T
he banks don’t wake up in the middle of the night worrying about the challenger banks, and they won’t be losing any sleep over Atom or ClearBank or any of the others for a long time yet. Certainly, I wouldn’t be worried about banks that pour most of their start-up funds into second-rate PR companies to do their marketing for them.
What the big retail banks are more worried about are the big technology outfits that have proven time and time again that they have the scale, depth of talent and understanding to continue disrupting the industry.
Where these companies may have the edge on the traditional banks is in their enormous amounts of live customer data and their ability to analyse it quickly and in a targeted manner. Whether the public will keep giving them this data for free forever is another question.
They can, therefore, bear down on the banks with a wealth of customer data about how their customers behave, what services they want from banks and what offerings they see as essential. In other words, they identify what customers really want as opposed to what the banks think customers want.
This data can be surprising; it can identify, for example, mainly rural areas where customers want their banks to have branches as opposed to urban areas where branches are less important. But not all areas conform to the norm, so only the actual data will ensure that customers are not incorrectly second-guessed.
What will Google do?
A new white paper by Arma Partner’s Mark Rodrigues aims to answer the question of what Google or Amazon will do in the future. Rodrigues points out that they are active investors in fintech and frequent collaborators and cloud services suppliers with innovative firms such as Goldman Sachs and Fidelity. Where, then, is the change likely to be and how?
He points out that: “We can be more expansive on workflow and the value chain. Uber doesn’t own cars and AirBNB doesn’t own
Amazon’s customer knowledge is its strength
rooms, so maybe in our exploration of fintech we can imagine curators, orchestrators, and brokering without always needing to own the parts or be subject to heavy regulation. We can also assume that any strategy into FS will do no harm to the existing core. Google and Facebook make their money today from digital advertising and together command 77% of that market. Thus, they will not do anything that harms today’s source of cash and growth. Amazon’s core is from product and service sales so we can be sure that will influence their choices in FS. Further, whatever any large cap tech does it will need to contribute to their goals of a trillion-dollar valuation and beyond.
In the world of Google, for example, Rodrigues says that Google and Amazon have been more careful than their Asian counterparts, with Google Wallet just being the start, and PSD2 will affect the market and the changing power dynamic between the bank, the merchant and the customer.
Rodrigues also says that tech giants in Asia are moving even faster. “Alibaba got into the asset management business and
www.ibsintelligence.com | © IBS Intelligence 2017
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