A message sprung up in the last decade that fintech startups pose threat to trading major players in the banking sector. The traditional banks have been facing a more ominous threat in the form of Big Tech. It is being said the threat would further materialize this year as companies like Apple, Facebook, Google and Amazon are drawing on their global reach as well as resources to minimize the monopoly power of banks.
The Big Tech companies are moving towards a cashless society and soon sending money through smartphones may become possible without leaving a messaging app or even without logging into a bank account. Technology is driving and tech companies are making more advances. The banks are not in pace with the move.
More to this, the Big Tech are more focused on offering a good user experience and this requires the use of real-time data to provide tailored recommendations to individuals. Tech companies have long been depending on data analysis and just a further improvement is required. The improvements are of course in progress and the new upgrade is an integration of AI and machine learning.
Big Tech companies have the capabilities in sweeping up the best in technology talent and this pushes back the traditional banks. The situation will further enhance in 2022 and competition is to increase even more. Big Tech companies are always ready to adapt to changes. They basically think years ahead and keep attracting people. This is the key to their success, in short.
Experts argue the traditional banks may soon find themselves far behind what they are now compared to the Big Tech companies in the sector as most are not serious about culture changes internally.
The strong customer authentication (SCA) regulations initiated in the United Kingdom should be a worry for the traditional banking sector. The Big Tech companies are favored more and both Google Pay and Apple Pay are equipped with SCA-compliant solutions.
The payments were existing in recent years could become more existential for banks and it is not to forget that the Big Tech companies have global customer bases.
Consumers of today mostly favor immediacy and of course ease of technology-enabled smart payments and companies like Google and Amazon have the cash reserves for the purpose.
It is being expected the traditional banking industry may be watching the tech companies anxiously to make the next move. The choice left for traditional banks could be stark. They either need to partner with the companies or ignore the threat.