Banking services from Google or Amazon?

By : |May 7, 2016 0
Image courtesy of punsayaporn at FreeDigitalPhotos.net

What if the giant tech companies like Google, Facebook or Amazon, who keep reinventing technologies to attract people, open a financial bank? Let’s imagine: Heavy competition, all these companies are making headlines daily with new updates or “schemes”. But were banks built to handle bits and clicks through Facebook or Google?

According to a recent poll by Fujitsu,which, 20 percent of respondents out of 7,000 surveyed consumers said they would use Facebook, Google or Amazon to buy banking or insurance services if available. The reason is simple- they expect big banks to keep rolling out technology innovations at the same pace that tech companies do and if that doesn’t happen, 37 percent would leave their banking or insurance provider.

The study revealed, “Consumers are showing they are open to innovative services to make their lives easier, with 32 percent already embracing mobile device payments; while 22 percent have adopted wearable technologies and 20 percent crypto-currencies, the latter driven by Eastern Europe usage where 44 percent say they use the technology.”

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Francois Fleutiaux, senior vice president and head of sales, EMEIA, Fujitsu said, “Today’s customers are no longer guarded. When it makes interaction more convenient they are willing to embrace innovation. They may not know where they need it until it is offered, but this is where technology comes to the fore – it is the engine that is driving consumer expectations forward and the financial services sector has to live up to this new pace of change.”

CIOL Banking Services from Google or Amazon?

Well, way before the study report, Google has been philandering with the idea through a series of small, but significant financial services.

The Great Bank of Google Ltd?

Google already has Android Pay, a simple and safe way to pay with your Android phone at over one million store locations across the US and within mobile apps. It is essentially an interface between your existing credit and debit cards, your phone and NFC card readers in stores – Google Wallet, which is an older, clunkier version that Pay was supposed to replace.

You can send money through Google, too and Facebook does the same. However, Amazon has taken a different step by offering loans to thousands of invited sellers in its marketplace.

But, why is it that these ideas are not transforming into formal financial services from these tech companies. First and foremost are regulations. The procedure is so long that it will take a small private bank more than four years to get its license in the UK.

In America, you have to go from state-to-state applying for a contract to do business. Now imagine doing that from country to country. The outcome will be a slow, cumbersome business, unlike Google, Amazon or Facebook.

The business of Banking

Giant financial institutions can twist these “giant tech companies” within few minutes; all they have to do is remove support. Financial institutions like Barclays can easily tell its 48 million global customers that it will no longer let them send money through the social network, which will definitely create a big hole of loss for tech companies.

In comparison with the financial industry that spends more than a billion dollars promoting the US government, the tech industry spends 100 times less.

Other options than banking

Google can learn from Curve, which allows users to combine all their existing cards from different banks into one card that is accepted everywhere. It presents all of that data on your phone, in real time. Mondo, a British startup which has created a card that you can use like the one a bank would issue but without the hassle.

In March 2015 the Economist Intelligence Unit, when conducting a survey of the retail banking sector, found 25 percent of respondents felt technology could most effectively help banks know their customers better, and knowing people is Google’s business already.

According to the University of Cambridge Judge Business School, cash reserves and assets will become less important than the digital movement of money online because of the ongoing growth of non-cash payments.

These big tech companies are in prime position to offer smaller, more constrained financial services without ever becoming what we’d traditionally think of as a bank. Compared with the banking industry, Google already knows what you tap into its search engine. Facebook knows what ethnicity you are purely by what you like. Amazon knows what you want before you’ll buy it.

Where most banks fall in categories like UX (User Experience) and customer service, Amazon could easily roll out a service that is, quick, easy to use and offers more one-on-one guidance to better money management as it prides itself on these two things.

Peter Simon, head of information at Barclays says, “It is more likely, like you see on Amazon, about being able to offer installment credit, because you can make a 20-30 percent return on that with the data you have, without necessarily having to open a branch.”

It simply means, a more exciting future waits for us!!

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