Bank of Google? Not exactly. But fintech's future is in Big Tech's ecosystems For all their differences, the biggest tech companies share one thing in common: They don't like to stay in their lane. In the more than 20 years we've evolved alongside Apple, Google and Amazon, and the slightly less than 20 we've lived with Facebook, each has branched into areas different from their founding purpose. Cloud …
we've evolved alongside Apple, Google and Amazon, and the slightly less than 20 we've lived with Facebook,"
Well in that time I've learned that I can't trust them with my photos or my personal information, so there is NO WAY I'm going to trust them as a bank. I kind of naively bought into the whole "Don't be Evil" thing around 2000 but I've wised up a little.
As for Andreessen Horowitz, they are all in with NFTs and Web 3, and they also invested in Theranos so you make up your own mind about them.
I suspect the most salient point is the one about regulation. Since 2008, banking concerns, especially large ones, have come under extensive regulatory scrutiny in the US. Also since 2008, many banks have been struggling (in comparison with the big tech companies, anyway), due to a combination of increased regulation, low interest rates, the need to keep adequate capital on hand, and increasingly cut-throat price competition in financial services, especially investments. For a tech company to take on the role of a bank, it would have to submit to drastically-increased regulatory oversight, which I suspect would not be welcome, in order to enter into a much lower-margin business. If faced with that option as a tech CEO, I would probably also go the partnership route rather than trying to form or buy a full-fledged banking concern.
An additional problem is that banking regulations are different in every country. That's fine for players like WeChat and AliPay, since they mostly operate in a single large country; but US tech giants are less likely to be attracted, considering even the US probably represents less than half of their revenue.
It isn't worth it because even if a big tech company wanted to get into banking they would only want to do a little bit of what a real bank does. They wouldn't want to have to handle direct deposits of paychecks, or offer accounts you could write paper checks on, and so forth.
Apple didn't need to be a bank to do Apple Pay and Apple Card and offer iPhone "subscriptions". Why would you want all that extra burden just to have customers expect you to offer a bunch of products and services you don't want to offer?
"even if a big tech company wanted to get into banking they would only want to do a little bit of what a real bank does. They wouldn't want to have to handle direct deposits of paychecks, or offer accounts you could write paper checks on, and so forth."
What the new 'online banks' are doing is exactly that. You can open an account, transfer data in and out electronically, get a physical debit or credit card, and put money in and out of investment accounts or direct funds/stocks etc investments. They have physical headquarters and servers *somewhere* but no branches or any way (or desire) for physically interacting with clients. hence also no cheques, no cash handling (deposits), while cash withdrawals are usually handled through the usual (fee-payable) partner agreements between banks about using each other's ATMs.
For many people especially young people in big cities who hardly use cash at all, and have it all accessible on their phone, what's not to like?
I still agree that big tech wouldn't want the regulatory scrutiny, though.
"Steadman says. In other words, don't expect Amazon to ask you to open a checking account - tech companies are far more poised to become the front end for your financial institution."
One keyword which is missing from the discussion is "payment intermediary", as Google, Apple, Meta pay (and Paypal) basically are. It is less a matter of banking, more a matter of digital payment circuits. As mentioned, the likes Google might not have incentives to enter the banking business, especially when they already have access to all transactions, data which can be leveraged to promote their main marketing platforms business.
The fact that they could use their position as intermediaries to indirectly offer low or zero interest financing to their customers... they are already doing it e.g. Apple Card Monthly installments (issued by Goldman Sachs).
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