Why and how tech giants entered the financial industry

We must start with the easy answer. Because they have the capital to do it. So, since they concentrate over 5.2 trillion dollars in revenue yearly, they have the power required to offer banking services, and provide credit to financial consumers.

   Amazon was among the first technology companies and retail giants that started an array of financial services, ranging from payments infrastructure to Amazon Pay, which has over 30 million customers worldwide. Amazon Cash, which launched in 2017, enables customers to deposit cash to their Amazon.com balance by showing a barcode at participating retailers. The cash is applied to their Amazon account immediately, similarly to debit and credit cards provided by banks.

   Amazon Cash offers no interest or fees, it provides security as it uses a unique personal barcode or your verified phone number every time you add cash to your Amazon Balance, and convenience, as it is ready enabled on smart devices.

   In response to Amazon, Apple, Facebook, Microsoft, Google, and Alibaba have started their banking concepts. Even the retail giant Walmart tried to make a bank recently. Starting with Apple though, its CEO recently announced the Apple Card, a new credit card, that enables purchases through the Apple Wallet app. Thus, it is not a bank card.

   They say that Apple Card lives on your iPhone, in the Wallet app. For every purchase you make, you get Daily Cash back, up to 3% depending on what service you use. Also, when you are ready to make a payment, Apple Card estimates the interest you will wind up paying, based on any payment amount you choose.

   However, every credit card needs an issuing bank, as Apple mentioned. Thus, to create Apple Card, they needed a partner that was up for the challenge, and this is the well-known Goldman Sachs, while the card is a creation of Mastercard. This is the first consumer credit card they have issued.

   Additionally, Google has become the latest big tech firm to move into banking by offering current accounts. The service will allow users to add Google’s analytic tools to traditional banking products. Google is partnering with Citigroup and a credit union at Stanford University for the initiative.

   According to recent studies, more and more of financial institutions are already partnering with one or more technology giants, or they plan to forge such partnerships within the next years. Furthermore, Google has a slogan that is quite concerning: “Banks know a lot about you, but there’s a company that knows even more.”.

   It also says that “you trust Google with your business emails, personal messages, internet search history and pictures. But while some find the depth of this relationship concerning, there is a way to make it work to your financial advantage - by putting Google in the same room as your bank and letting them talk.”.