Skip to main content

What Happens To Banks When Amazon And Apple Go After Their Business

Two interesting pieces of news in the last week or so makes me think that now might not necessarily be a good time to be a bank.

Firstly, Apple announced that it will be supporting peer to peer payments in iOS 11 and then shortly after we learned that Amazon was looking to cut fees paid to credit card companies by incentivising customers to load the Amazon account via their debit cards.

It's the smallest encroachment into the world of the retail banking giants but a significant one nonetheless. It can only be a short hop from peer to peer payments on your iPhone reaching your bank; to peer to peer payments on your iPhone staying in your iTunes account for future use. An even smaller step for Amazon to look to disrupt banking in the same way it has decimated book sellers, high street retailers and, coming soon, supermarkets.

Where Amazon and Apple lead, Google will undoubtedly follow. The net result, inevitably, being significant pressure on banks, with their expensive to maintain branches, high cost retail staff and slow to respond management structures.

How do banks respond? I'm not sure that's even possible. Just as Nokia (eventually) saw the rise of the iPhone as an extinction level event and raced into the arms of Microsoft in the hope of salvation, so the banks are hamstrung by the weight of history and legislation. As we've seen with Uber and AirBnB, a preponderance of legislation doesn't always prevent an idea from taking off.

Losing deposits makes it harder for banks to maintain the risk standards imposed on them post-GFC, meaning that lending will have to be cut back to stay compliant. Apple, Amazon and Google are perfectly placed to step into the resulting void and make their billions work for them. Each has significant information about the financial activities of its customers and can leverage that information to frame lending decisions. Previously that kind of knowledge sat exclusively with the banks.

Whether heavy investment in the rising FinTech economy helps banks to respond, or whether it's a question of rebuilding their operational models; banks will have to change to survive - and many just won't have the ability to do that.


Popular posts from this blog

F1: Robert Kubica Impresses In Renault Test Run

The car may be old but its the performance of the driver that's the story here. Robert Kubica returned to F1, after a fashion, earlier this week with an extensive test run in a 2012 Lotus Renault F1 car at Valencia.
The age of the car and the circuit were likely determined by F1's current rules which ban testing, but the reason for Kubica being in the car is far more interesting. Considered by many to be a potential World Champion and certainly one of the fastest drivers of his generation, Kubica's F1 career seemed to be over after a 2011 crash whilst driving in the Rally of Andora. His Skoda Fabia was penetrated by a guardrail in the high speed accident partially severing his right arm.
Up until last year Kubica has been competing in rallying, with the expectation that the limited movement in his repaired arm would prohibit a return to single seater racing.
So this week's test is both interesting and confusing. Interesting because Kubica completed 115 laps of the ret…

F1: Robert Kubica's Williams Test Asks More Questions Than It Answers

Comparing driver's times at a tyre evaluation test like last week's Abu Dhabi event is difficult at the best of times, but when trying to assess the performance of a driver who has been out of the sport for six years, that difficulty level is raised even higher.
On the face of it Robert Kubica's test for Williams was a success. Fastest of the three Williams drivers present the headlines look promising. However, taking into consideration the different tyres used to set those times muddies the water considerably.
Kubica ran a three lap qualifying simulation on the new 'hyper-soft' tyre - which should have given him a two-second advantage. Correcting for tyres it would appear that Kubica was significantly slower than Sergei Sorotkin - who was on the harder 'soft' tyre - and marginally quicker than Lance Stroll, the team's only contracted driver.

Stroll's family fortune currently funds Williams, so there' no chance that he will be anywhere but in a…

Panos Panay's Defence Of Microsoft Surface Hardware Sounds Eerily Familiar

This weekend I went out with my ten year old daughter to select a laptop for her school year beginning in January. The schools requirements are quite specific, requiring a Windows 10 device, with a preference for a touchscreen and a stylus. She chose a Surface Pro, after trying a large number of different options. Having seen the way I use my own Surface Pro - and tried it herself there was only ever going to be two options - and the other was a Surface Laptop.
I tell you this so that you understand I am a buyer of Microsoft's products through choice, not compulsion. I'm on my third Surface device now. 
So when Panos Panay dismissed reports of the death of the Surface hardware line, I was very interested to see exactly how strong these denials were. Especially how they reflect what has gone before. To whit: Windows 10 Mobile.
Panay claimed that Microsoft is in hardware for the long haul. Almost exactly mirroring the words of Terry Myerson, when he claimed Windows Mobile was g…