For so long, the tech world has been a precise range of tech giants like Google, Facebook, Apple and Amazon. But this time these organizations have started to step outside their familiar boundaries. In the beginning, they have turned a blind eye to the banking sector. It is said that these big technology companies want to expand their business by engaging in transactions and other financial activities.
Google, Facebook, Apple and Amazon have already started retail banking activities. Last June, Amazon introduced a special credit card for shopping. Last August, Apple launched its own credit card. On November 12, Facebook announced that it was coming up with a new transaction system for its customers. The very next day, Google announced that customers would soon be offered a current account or a checking account. Initially, customers in the United States will receive this benefit.
However, analysts say that these initiatives of big technology companies are not a big issue for the entire banking system. However, it is clear from their interest that in the coming days, various initiatives of technology companies will give a new dimension to the business of financial activities. Even the flow of trade can change.
According to the British magazine The Economist, Google-Facebook has been keeping an eye on the financial institution market for a long time. This time the big technology companies want to give other financial benefits to the customers like the bank. However, companies like Google and Apple do not want to be banks even if they want to do various things. Because, if you want to be a financial institution, you have to abide by various strict rules. Mark Zuckerberg does not want to be trapped by those restrictions.
Apple Pay and Google Pay have been launched to focus on virtual transactions. These two are basically digital wallets. However, even if the digital version of the card is saved, Google-Apple does not process the transaction. Basically, they are responsible for keeping all the information of the client safe. Meanwhile, Facebook's special transaction system can also be used in Messenger, Instagram and WhatsApp. Uber's transaction system will benefit Uber Money drivers as well as app users. Meanwhile Amazon Pay is a bit different in nature. In addition to storing customer information, Amazon also handles transaction processing. But others have handed over the task of transaction to expert organizations. Apple has placed Goldman Sachs in charge of such transactions. Citigroup is next to Google. And Amazon is being matched by American Express.
Analysts say Western technology companies have been largely inspired by Chinese-made examples. WeChat Pay and Ali Pay are very popular in China. Since its launch in 2013, the growth of these two apps in the transaction process has been steadily increasing. From buying tea to paying taxi bills — everything can be done by scanning the QR code in these two apps. Digital transactions have more than 100 million subscribers in China. One-third of the total consumer spending in China is through these apps.
However, the Chinese model is not expected to be effective in various European countries, including the United States. Aaron Klein, an official at think tank Brookings, says countries in the developed and rich world already have a full-fledged credit card system. It is very difficult to popularize the app-based transaction system with it. Because, in order to snatch the customers from the conventional bank, a large amount of dividend has to be paid. In addition, the country-based local rules must be obeyed.
But despite all these obstacles, why do tech giants want to enter the banking sector? According to the analysis of US media Wired, in addition to cash Narayan, another reason why big technology companies are interested in entering the banking sector. That is, customer information. If information related to customers' financial transactions and shopping habits comes into the hands of Google-Facebook, it will be an invaluable resource. This will allow customers to understand the type of expenses and then sell them to various mainstream financial institutions. Which ad to show to which customer can also be accurately determined. And this is exactly the reason why Google, Facebook, Apple and Amazon have become interested in working like a bank without being a bank.
According to US media Fortune, the global market for the banking sector is evolving. This change is coming at the hands of big technology companies. These companies will provide technical assistance to the established banks. In return, the banks will handle their financial transactions. That is, in this case, no one is competing with anyone; Rather the whole system is being changed by cooperating with each other.
Meanwhile, Forbes says that the whole world is going to fall into another economic recession due to the new coronavirus. There are fears of a recession in various businesses. In such a scenario, tech giants like Google, Facebook and Apple are trying to revive the long-standing intention to join financial activities like banks. That's why Google has recently taken up the project of making smart debit cards. However, Bitcoin can be an obstacle to such a desire. Bitcoin was created in the wake of the last economic downturn. If you want to be like the bank this time, Google-Facebook will have to defeat Bitcoin first.
Critics say the tech giants will become more influential in the process. Their control will be established in everything in human life. The rate of people spending time in the virtual world will increase. But since the leaking of personal and sensitive information to customers is a daily occurrence, there is a risk of abuse of power by large technology companies. Even democratic values could be at risk worldwide.
That is, one thing is clear: the whole world is changing. Banks and technology companies are working side by side in this regard. Survivors in the future are those who can adapt to change. It remains to be seen who will survive in the end.