The threat, the report expounds, is that the likes of Facebook and Google could use their role as tech partner to the banking industry to become usurper, switching on their own banking offer at any point.
But is this threat more real today than before? The tech superpowers could set their sights on almost any area ripe for a refresh, whether advertising, e-commerce or simply navigating us from A-B. Financial developments within Facebook have come thick and fast. It introduced person-to-person payments within Messenger in 2015, and earlier this year expanded the feature to support groups. And this expansion into finance provider is not limited to the platform. WhatsApp is set to become the latest Facebook-owned service to let users transfer money to one another with a text. Google has its own digital wallet, currency converter and real-time stock quotes. Google of course has more real, and deep minds than anyone else in the tech ecosystem!
But it is the fintechs who are powering a much wider range of digital solutions which tackle a plethora of more niche issues. And as Schumpeter’s Theory of Innovation propounds, it is innovation within businesses which – despite potentially causing instability - is the most significant reason for increased investment. To coin a phrase, ‘rising innovation lifts all businesses’.
The CEO of Shoreditch start-up Aire, driven by personal experience of migrating to the UK from the US, put his PHD-heavy team to work creating a credit assessment system powered by artificial intelligence. More people can borrow money without lenders increasing their risk. Companies like Billon are fusing the power of blockchain technology with the trust we hold in mainstream currencies to transform payments via a patented technology.
And small start-ups like data experts onefourzero are building bespoke triangulation technologies to allow private equity houses to map the digital footprint of potential investments in a due diligence process that had not innovated in decades.
Google, Facebook, Amazon and Apple and the like are not blind to these technologies and do have the potential to become banks in their own right, with the access to data on our every move (literally).
But rather than see this as a threat, surely, as Phillip Nunn, CEO of multi-asset investment house the Blackmore Group recently set out, there is a massive opportunity for the savvy tech-focused fintechs. They need not only look to financial institutions for their lucrative exit and mass market opening. While they continue to keep their focus on creating genuine progress in the world of finance, they will remain collaborators and not competitors with the tech kings of today.
This article was kindly submitted by Debbie Zaman, founder, Withpr