02. 19. 2018
Why Amazon or Google really wants to expand in financial services – W.UP Digital Banking Weekly
Technology companies are not interested in the fees, charges and interest that can be made on payments, credit and loans. But then why do they pose a threat to traditional banks?
These are the real financial plans of tech firms
Tech giants, like Amazon, Google or Alibaba, are moving into financial services to get more traffic, not to make money out of payments and credit, according to Chris Skinner. He wrote it is why technology companies could offer zero-interest loans and zero cost payments, which is a real threat to banks.
“They will do this through holistic data analytics on the customers’ digital lifestyle, which banks fundamentally cannot deliver without rethinking their systems. Interesting times ahead,” he wrote.
Banks underestimate the impact of disruption
Those banks that continue to have a passion for yesterday’s banking models will soon see negative impacts on growth and revenue, Jim Marous, co-publisher of The Digital Brand, said. He cited a McKinsey report on how many financial institutions underestimate the increasing momentum of digitization.
“Many companies are still locked into strategy-development processes that churn along on annual cycles,” the report said. Only 8% of companies surveyed said their current business model would remain economically viable if their industry keeps digitizing at its current course and speed.
Digital maturity is more than just digital spending
Of the five stages of digital maturity – not pursuing, beginning, transitioning, maturing and digital leadership – most global banks consider themselves as transitioning, according to a survey by EY.
Reflecting this, two-thirds of respondents the survey anticipated their technology investment budgets to rise by more than 10% in 2018 as they mature. But EY questions whether this spending can necessarily lead to digital leadership.
Convenient payments offer benefits to banks too
Complicated payment processes were to blame for 23% of late mortgage payments by millennials, according to a survey of US customers by ACI Worldwide and Mastercard Advisors.
Pymnts.com reported that the preferred mortgage bill payment method is with a card and this would increase as more millennials become homeowners. The survey also found that having a convenient payment method lowers call center calls by close to 85% and social media complaints by nearly half.