Banks can buy the FinTechs, it is the BigTechs they have to worry about

By Bernard Lunn

That is a common Banker refrain at conferences. When the BigTechs (Google, Apple, Facebook, Alibaba etc) move into financial services it will no longer be a David vs Goliath story. It will be Goliath vs Goliath story. It will be BigBanks vs BigTechs.

We covered some of the BigTech move into FinTech about 9 months ago. These profiles need updating but you can at least see the direction of travel:





Financial Services will be collateral damage from a bigger war about how to monetize content.

This article in The Verge describes Apple is taking the oxygen out of Google’s room using ad blockers on mobile.

With the ad revenue line under threat, BigTech will go more aggressively after big niche markets such as finance and healthcare where they can get transactional revenue.

To break into these markets, BigTech will offer massively lower prices (10x lower) because that is the logic of Moore’s Law. Consumers will benefit (and consumers vote, so I don’t expect Regulation to be a good moat for Banks for much longer).

I assume banks are not reassured to know that their market is only a niche that is collateral damage in a bigger war!

Stock up on popcorn, this one will be spectacular.

It is mostly a positive for Fintechs who will be acquisition targets for BigTech. A very, very small number of Fintech ScaleUps will become BigTech themselves. There are also be plenty of niches (particularly in B2B) where BigTech is not interested and Fintechs can grow without a destructive battle with BigTech.

A few global BigBanks will compete with BigTech. Increasingly they will become financial services platforms used by an ecosystem of Fintechs and smaller Banks.

The other banks (about 9,000) will do well by using platforms offered by BigTechs, BigBanks and Fintech ScaleUps and using these platforms to stay close to their customer without big IT investments.

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