Google is partnering with banks and credit unions to offer banking and other financial services to its clients. This is to take off as early as next year. Facebook is also looking to allow patrons send money through Messenger. These look quite an audacious move for the tech giants in banking. In the regular MBA lessons, diversification across industries is said to carry higher risk than diversification within industries. However, Google has the advantage of some consumer behaviour analytic capabilities that could be deployed in the said services. Besides, it is itself not becoming the bank but partnering with a bank and only offering a platform which is still Google’s strength.
Google is calling the project “Cache,”. It intends to hand over all financial and compliance activities related to the accounts to the partnering banks and credit unions. Google says it’s also intending to offer product advantages for both consumers and banks. It’s also still considering whether or not it’ll charge service fees
Google’s Google Pay and its Google Wallet product has hosted some features beyond simple payments tracking, including the ability to send money between individuals. Meanwhile, rivals, including Apple, have also introduced payment products, and Apple of course recently expanded into the credit market with Apple Card. Facebook also introduced its own digital payment product earlier this week, and earlier this year announced its intent to build its own digital currency called “Libra” along with partners.
Facebook launched their financial services already lets you send money to your friends and family through Messenger but the company is planning to make it easier to keep track of payments across all of its apps, including photo app Instagram and messaging app WhatsApp.
In Africa, telecom giant MTN took the lead to offer a payment service which spread like wildfire . It now holds over 27 million registered mobile money subscribers across Africa and middle east. MTN mobile money continues to grow, which is now the drive for MTN to become the biggest bank in Africa.
The ‘tech giants in banking’ trend go to show how industries are merging and how no one company can hold a dominant position in one industry for long. Also tells of how companies need to be responsive to the dynamics of their customers and be ready to be fluid enough to flow into other areas where their capabilities can extend
