"Would you like to set Facebook as your default Bank Account?" Yes, please.

Although it might sound a bit crazy at the moment, but this or other similar question can be very common in the near future. In fact, we can replace Facebook with Google, Amazon, or any other tech giant that controls enormous amounts of customer data. And information is everything.

It is very arguable (to be honest, I highly doubt this) whether technology companies will shift towards banking as such. However, there are other ways how these companies will and already are taking their share of the pie from the incumbents in the financial services industry.

People are interested in Banking with Facebook, Google, and Amazon

Back in 2016 a poll carried out by Fujitsu has revealed that 20% of respondents would use Facebook, Google or Amazon to buy banking or insurance services if available.

A more recent survey, conducted by the consulting firm Accenture, which polled 32.715 people in 18 countries, found out that 31% of global respondents would switch to Google, Amazon, or Facebook for banking, and 29% would switch for insurance. Obviously, these are rather huge numbers that should make banks really cautions.

We must stress that such numbers are essentially driven by great customer experience and personalisation – two core things that technology titans deliver perfectly. We should especially highlight Amazon here, which has based its growth on the consumer insights. And it have worked out perfectly.

Technology companies in the Financial Services

As stated earlier, the aforesaid leaders in tech have already taken some share of the pie from the typical players in this field.

Google had its Wallet, now it has Android Pay and Google Pay, which are at the heart of further emergence and expansion of mobile payments. Also, just last week Google has announced that consumers can now use their Google credentials to make online and mobile payments via a stored credit card.

Facebook allows you to make peer-to-pear payments using the Facebook Messenger. In addition to this, back in 2016 the company has secured an e-money license, which might indicate that this service can be rolled out internationally, enabling easy and secure cross-border payments.

Amazon is providing loans to thousands of invited sellers in its market place. Moreover, earlier this year the e-commerce giant has introduced its credit card (in a partnership with Chase).

So, will we see Facebook/Google/Amazon opening their Banking Branches?

Highly unlikely. One of the reasons is that financial services is a highly regulated sector, and to open a bank branch is not as simple as an Amazon Bookstore. I have written a separate passage with regards to why there are no challenger banks in the US. The reasons outlined very much apply here as well.

Another reason stems from the second Directive on Payment Services (PSD2). Once PSD2 kicks off in 2018, companies like Google, Facebook, or Amazon will begin asking consumers for a permission to access their account information and to initiate payments on their behalf. Having this in mind, why would you need to set up a bank of your own?

Finally, as noted couple of times, Customer Experience is the KEY in FinTech and financial services. This is what drives sales and customer acquisition. As tech titans are experts in this field, they can easily provide financial services and manage customers, while banks and other financial institutions are in fact those that hold clients’ money.

Bringing it all together

To sum up, we can say that technology companies most probably will not become financial players per se. Nevertheless, their mark in the financial sector will definitely grow. I would argue that mobile payments might be the field where their impact can be the strongest. They have just to do it right (see, for instance, Starbucks).