“We have no intention of becoming a bank”: Is Big Tech really a threat to banks?
- While Big Tech companies can be intimidating, the oftentimes overlooked factor is the underlying strategy behind their expansion into financial services.
- Big Tech companies are not coming into the industry to compete with banks as a unilateral force - they are looking to partner to enhance their own business.
When big technology companies start to expand into different industries, they are quick to be labelled as ‘disruptive’. In the financial services sector, the circulating rhetoric has been that Big Tech is coming into the industry as a unilateral force to compete with banks.
“The industry tends to talk about this kind of big tech threat as one overarching problem, and I think that’s really the wrong characterization,” Kate Drew, director of research at CCG Catalyst told Tearsheet.
Big Tech is a nickname given to the five biggest technology companies in the world: Apple, Google, Facebook, Amazon and Microsoft. While Microsoft just recently announced its first consumer fintech move by adding BNPL into its browser, the other four are all more established players in the space.
The sheer size and capabilities of these companies can be intimidating, as is their advantage of having an existing user base of millions of people to offer banking products to. However, the oftentimes overlooked factor is the underlying strategy behind their expansion which, upon a closer look, suggests that direct competition with banks is not really on their main agenda.
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