One by one, the GAFAs are entering the financial services sector. Google and Amazon are each working on a current account offering, Apple has launched its bank card in partnership with Goldman Sachs, and Facebook plans to offer its own virtual currency, Libra. Should we fear these advances, or see them as opportunities for new partnerships?
Big Tech advances in the financial services sector
Almost a year ago, Apple inaugurated its bank card in the United States. The Apple Card, which works with Apple Pay, is available in the iPhone's Wallet application. It is a credit card, provided free of charge, which offers a cashback program and allocates to its users amounts defined according to an algorithm. Amazon also offers a credit card, targeting customers who are unable to access a conventional credit card due to a poor score established by specialized rating institutes.
For its part, the giant Google wants to offer current accounts to individuals as early as this year, via a partnership with the American bank Citigroup, which would manage these accounts. The same goes for Amazon, which is working on this project with the bank JP Morgan.
Facebook has launched a payment service, Facebook Pay, and is still working on the creation of the Libra digital currency, despite protests from authorities in several countries.
In China, the giants Alibaba and Tencent are not to be outdone, already offering current accounts and insurance.
Are Big Techs the banks' partners or competitors?
Big Techs, be they GAFAs in the USA or BATXs in China (Baidu, Alibaba, Tencent and Xiaomi) have one major advantage over banks: data. Indeed, while banks struggle with regulations on data processing and use, Big Techs have an incalculable amount of data on their users: consumption, payment and purchasing habits, interactions with companies, search engine queries... Everything is at their fingertips to offer targeted banking products and establish credit scoring.
This makes it difficult for banks to have sufficient clout to compete with the Big Techs. However, while American banks have opted to establish partnerships, the same cannot be said of European banks, which take a very dim view of the arrival of these giants on the market.
So far, the GAFAs have remained confined to the payment sector in Europe, but the situation could change. Banks are striving to enhance their applications and add new functionalities, and are beginning to offer cashback in partnership with major chains and local retailers. However, it is by no means certain that these developments will enable them to hold their own against the Big Techs - if, that is, customers place their trust in the latter when it comes to financial services.