As headers "Amazon secretly becomes a bank" and "Google wants to become a bank now" more and more appear in the news, technological giants attract attention as potential potential violators of payments.
And with the wide coverage of these companies and huge resources, the likelihood that they will fall for financial services is a difficult story that can be avoided. To mitigate potential losses in this scenario, traditional players will not only have to grasp the threat level, but also which segments of the financial industry are at greatest risk of destruction.
Google, Apple, Facebook, Amazon and Microsoft, collectively known as GAFAM, are already active investors in the payment industry, and they are slowly invading the main offerings of existing suppliers. Each of the five companies introduced functions and proposals that could violate certain parts of the banking system. And we expect that there will be a lot of additional offers on the market, as these companies are trying to build their ecosystems.
However, it is unlikely that any of these firms will become full-fledged banks or fully sublime actors due to regulatory barriers and entrenched positions of large banks. Moreover, consumers still trust traditional firms primarily with their financial data. This means that these companies are more likely to rumble in the cages of actors than they can cause their complete demise. Nevertheless, these companies have a proven ability to revolutionize the industry, making their entry into payment systems critical to monitoring players, especially because their actions demonstrate the intention to become a destructive force in the industry.
In this report, Intellectual Business Intelligence analyzes the current impact of GAFAM on the financial services industry and the strengths and weaknesses of each firm's position in payments. We also discuss the barriers faced by these companies when they penetrate deeper into financial services, and what aspects of the core business of the bank provide the greatest opportunities for new players. Finally, we assess the future potential of these companies in payments and the wider financial services industry, and also learn how managers can manage a threat.
Here are some of the key findings:
- GAFAM actively invades the payment space. This includes the offer of mobile wallets for online payments and online payments, peer-to-peer money transfers and even loans for small and medium business.
- The wide coverage of these companies and high resources led to the fact that they were able to take on the inherited players. In GAFAM, there are products that have been accepted by millions of users, and in some cases by billions. They also have access to huge capital – Apple, Microsoft and Google collected more than $ 400 billion in money at the end of 2016.
- However, these firms must overcome the main obstacles to compete with players that include regulation and trust. For example, 60% of respondents to the Business Insider Intelligence survey said they trust their bank most to provide them with financial services.
- As a result of these barriers, it is more likely that GAFAM will dent in very specific segments of the financial services industry, rather than completely violate it.
In general, the report:
- Explains what GAFAM did to put themselves in position to become potential potential infringers of payments.
- Overcomes the strengths and weaknesses of each company, as it is related to their ability to create an extensive financial ecosystem.
- Potential barriers are considered that may limit the ability of GAFAM to capture a significant share of the payment industry from traditional players.
- Determines what strategies the game players would inherit in order to mitigate the threat by these technical giants.