The past is over. Its race is run. Vol. 5 averts its eyes from the ugly form of yesteryear, and looks to the aesthetic future. A future of digital first finance, mobile apps and flying cars (possibly). But why change a winning formula just because talk of the past is turning to talk of the future? No. Continuity is king. To provide balance and contrast, the future must be dealt with in precisely the same way as the past.
You’re reading The Fintech History Book Vol. 5: Back to the Future: Vol. 1 – GAFA.
In Vol. 1–4 we spooled through the archives of history as fintech germinated from seed to stem. From nervous creature stalking the wings, to noble beast howling war cries at dogged and entrenched incumbents. Fintech has hit the present with a bang. But from here on out, the path is uncharted.
Vol. 5 takes a peak at what big tech has in store for the future of fintech. Or techfin, if you will. Or GAFA (if you’re a fan of acronyms).
Let’s start at the beginning. Or the beginning of the acronym. Google.
Founded in 1998 by Larry Page and Sergrey Brin while they were Ph.D. students, the pair have carved out relatively successful careers for themselves on the back of their first venture. A misspelling of “googol”, the name represents the idea that you don’t need to be able to spell to be a billionaire. This is something that Donald Trump also represents.
Recently, alongside its arsenal of others offerings (browser, cloud storage, YouTube) Google has announced it will offer checking accounts as part of a project code-named Cache. It’s a bold move in the big tech’s bid to be your bank, and the tech giant has partnered with prominent financial institutions such as Citigroup along the way. Cache could come into play as early as next year.
Google has made it clear that it plans to put its financial institution partners much more front and centre than previous techfin forays into banking. So without the branding, what does Google stand to gain? Insight. Alongside the quite humungous amount of data Google already commands, insight into behavioural patterns around spending would paint a pretty clear picture of consumer’s financial day to day. Knowledge is power, it would seem.
A is for Amazon. Well, the first A is.
Beginning life as a humble book shop, Amazon has now broadened its remit somewhat. You can get almost anything on Amazon. Except, maybe, abstract concepts like hope and jealousy, but they may have plans to introduce those lines in the New Year. Time will tell.
Amazon stepping into the world of finance is no new thing. In 2007 Amazon launched Amazon Pay. Earlier this year in June, the online marketplace introduced a credit card for underbanked shoppers. Like Google, Amazon has partnered with a pre-existing financial institution, Synchrony Financial. The big tech message is this: collaboration is key.
2020 will be a telling year as it becomes clearer how much uptake the credit card has had. Will it cement Amazon’s place in the financial market, or signal another attempt by big tech to penetrate the financial market that just misses the mark? You can get almost anything on Amazon, why not financial products?
The F word. Facebook.
Facebook have had a busy year in fintech. In June, they launched their much mooted cryptocurrency, Libra. The potential was massive, with noises being made that Facebook could become the biggest central bank in the world. The red tape however was bigger. Concerns over Facebook’s use of data have been at the forefront of mind since it emerged that Cambridge Analytica had disseminated personal data from millions without their consent.
In November, Facebook announced it would launch a new payment service called, you guessed it, Facebook Pay. I know what you’re thinking and yes, you can already send money through Facebook. What you couldn’t do was send money through other Facebook apps like WhatsApp or Instagram. Well now you can.
Separate from Calibra – the company’s digital wallet – Facebook Pay could make a real impact in the P2P payments market. I don’t know anyone who doesn’t use at least one of Facebook’s platforms. Providing there isn’t the sort of data protection backlash that saw Mark Zuckerberg turn whipping boy for an afternoon on Capitol Hill, Facebook Pay could be the company’s first genuine success in fintech.
A, number two. Apple. And that’s sequential, not preferential.
Apple for their part, moved into fintech in 2014 with Apple Pay. And in 2019 they moved further into financial offerings with the Apple card. Backed by JP Morgan, Apple Card has been well received by users. It signals to big tech becoming more successful in its financial offerings.
The credit card gives Apple an opportunity to further inextricably link its customers with the Apple brand, by making it more difficult to gravitate towards Android. Apple Card is only available to iPhone users, and who wants to deal with the inconvenience of changing credit cards just to change phones?
On top of this, Apple have just released a new payment plan that allows Apple Card holders to purchase an iPhone in 24 monthly instalments without any interest. The messaging is this, stay with Apple, get more Apple stuff.
It’s the carrot and stick, but the key is, whichever one snares you, it’s just more convenient to stay with Apple.
Big tech is looking to carve itself a larger sphere of influence in all of our lives. Offering convenience and threatening inconvenience is the mantra. Fintech is the latest market segment the tech titans are targeting and with the right partnerships, financial offerings could become a very important part of their product line. The data insights financial products can provide is like a crystal ball to GAFA. Know your customer, predict the future. Kind of.
And that’s it for Vol. 5. Look out for The Fintech History Book Vol. 6: Back to the Future: Vol. 2 – BAT, and get the scoop on the Asian tech challenging GAFA for primacy in the financial services. When Qui-Gon Jinn said “there’s always a bigger fish” in the much lampooned The Phantom Menace, this is what he was probably talking about.
