Mega technology companies such as Amazon, Apple, Meta and Alphabet, the parent company of Google, occupy the tricky space of being both a friend and perceived threat to traditional financial institutions.
On one hand, their credit cards, buy now/pay later products and prospective deposit accounts depend on traditional financial institutions or fintechs to get off the ground. Banks are also increasingly migrating to some of their public cloud services. On the other hand, they periodically play with the idea of rolling out financial products to their massive customer bases that would compete with bank partners.
“One of the biggest fears of banking executives is that the four large tech titans — Amazon, Apple, Facebook and Google — will move into banking and come after their clients,” wrote Alyson Clarke, a principal analyst at Forrester, in a 2020 report.
None of these companies have taken steps to obtain a banking license, so for now they need the support of financial institutions to offer bank products. But the prevalence of application programming interfaces and infrastructure providers means they don’t need to build financial capabilities in-house or take on the regulatory complexities, said Elif Yayla, senior intelligence analyst in fintech at CB Insights.
“Everything can be integrated in a few clicks,” she said.
In her mind, the goal of big technology companies’ incursions into financial services is to lock users into their ecosystems. “They get the benefit of customers spending more time in their product environments,” she said. “They get closer to transactions and more data on user behaviors, which will generate more revenue in the long run.”
Here is a closer look at the latest investments Amazon, Apple, Meta and Google have made in their financial services arms.
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