Alessandro Hatami, Managing Partner of Pacemakers.io elaborates on the ways the Big Tech companies are moving into banking at pace.
Thought Leaders in Finance: How GAFA/Big Tech will approach Banking — the third in a five part series.
Social platforms don’t want to become manufacturers of financial services, they want to be providers of financial services. So ultimately what they’re looking for is potentially the complete disintermediation of the banks from the customers.
It would not be impossible for Apple to say, you know what Alessandro, if you want, I can show you how your money would perform at all the other banks in the country that I’m serving, and then you can choose which one you want to go to. And at that point with a PSD2 and Open Banking API, all it takes is the customer to say, ‘Sure, I want to move my accounts from A to B’. At that point, what happens is that the provider of my bank account becomes irrelevant.
And the only trusted third party that I listened to on this is Apple and what they’re doing here is embedding their services into something that is completely invisible to the customer as a financial product: they’re thinking about outcomes again.
So ultimately, they have these very big players that have a big incentive. You have the technology and the customer’s appetite that is going more and more into the direction of accepting digital capability and you have regulation that is supportive of change. So it’s a perfect storm.
One of the big interests that GAFA has is the data that’s inherent in Financial Services. They know a lot about you because of your likes and dislikes, and your search history, and so on and so forth. But one of the indicators of who you are is how you spend your money.
And this big amount of financial information that is now available to the banks, they want to gain access to. Both these parties, the financial services providers and the social platforms, they have this information. And it’s a it’s a game of seeing who can maximise the value of this. If a large corporate is thinking about innovation, they need to be thinking about maybe they can do that. With collaboration with a third party to create these new propositions that allow them to prevent the social platforms to disintermediate. So the battle is not over.