Big Tech threatens legacy financial services market

GlobalData’s Future of Financial Services report details how biometric payments are set to become the dominant payment method in future.

Big Tech poses a significant threat to established financial services firms when it comes to biometric payment products, according to GlobalData’s?Future of Financial Services – Thematic Intelligence?report.?

The report, which was published in August, examines how disruptive technologies such as AI, cryptocurrencies and quantum computing are affecting the financial services industry and how Big Tech companies have set their sights on financial payment products over the past two decades. Various technology firms have launched products such as buy-now-pay-later schemes and mobile wallets, with?Amazon?and?Apple launching retail banking products.

As Big Tech looks to create super apps incorporating marketplaces, financial services will integrate directly into these platforms. However, GlobalData warns that companies may face regulatory challenges in doing so.

Biometric payments

One of the most significant advancements in the financial services sector is the capacity for biometric payments. According to the GlobalData report, such payments will be mainstream by 2035, with traditional financial institutions becoming more involved in utilising the technologies.

By 2035, financial services companies will be utilising biometric-based national IDs for payment authentication, with retailers installing biometric scanners such as fingerprints, facial recognition and iris scanners at point-of-sale (POS) terminals. This payment method is set to replace traditional methods such as cards and PINs.

While many presume privacy and anonymity may be concerns for consumers when making payments, GlobalData’s 2023 Financial Services Consumer Survey revealed that most people value simplicity and speed significantly over other factors such as privacy and anonymity.

Norway’s IDEX Biometrics and?Zwipe?Pay and the UAE’s ADIB - Abu Dhabi Islamic Bank are notable firms identified by the GlobalData report in the biometric payment space.

Google leads

According to GlobalData,?Google?is the Big Tech company most well-placed to disrupt the financial services sector due to its global reach and established brand.

In 2006, the the US firm launched Google Checkout, followed by Google Wallet in 2011, until it was succeeded by Android Pay. Later, the two merged to become Google Pay in 2018, which has since reverted to being named Google Wallet.

While further plans for Google to enter financial services have been laid to rest, GlobalData’s report predicts that with an improving economic environment, the company may begin targeting independent banking services once more.