- Last year saw a series of announcements from Google, Apple, Facebook, and Amazon (GAFA) quartet moving further into financial services.
- In this op-ed, Sarah Kocianski, head of research for banking and fintech consulting firm 11:FS, discusses what the implications could be for Wall Street and Big Tech.
Last year saw a series of announcements from Google, Apple, Facebook, and Amazon (GAFA) quartet moving further into financial services. Apple Card being the most significant, but Facebook Pay and Google’s collaboration also created buzz. Now Goldman Sachs is in talks with Amazon to offer small business loans to its US customers.
Amazon is an interesting one. It already offers loans and insurance, and while it’s first attempt at entering the student loan market through its partnership with Wells Fargo ended abruptly, this week’s announcement signals that they’ve learned from that experience. Also not forgetting the recent BBVA announcement to sell products through its marketplace, it is becoming clear that Amazon is looking to be a collaborative distributor of financial products not the direct competitor to Wall Street that some envisioned. At least not any time soon.
So far big tech’s push into financial services has been more slow creep than huge strides. We are seeing big tech firms continuing to add services that are peripheral to banking to their existing offerings, without going full-stack banking.
Why? The headache of getting, and maintaining, a banking license is too big a risk for these companies when they can enter the market with licensed partners. The Apple Card, Mastercard, Goldman Sachs collaboration is the model to follow. Apple gets the service to users, while Goldman gets to compete with Citi, Chase, and others with the benefit of one of the most trusted brands in the world.
For Google customers that are already using Google Pay, then a Google checking account may well feel like a natural next step — they already trust Google with their transaction data. I’m not sure that many would use such an account as a deposit account for large sums, I also don’t believe that Google wants to be a holder of funds. Google’s strategy appears to be focused around gathering transaction-level data it can use for its own purposes.