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What is BigTech and why banks should be wary of it.
BigTech: What a real competitor to traditional banks looks like.
The US Financial Stability Board (FSB) has warned banks about who could become their real competitors. According to the FSB, traditional banks should be wary not of fintech companies, as is commonly believed, but of BigTech's likely entry into the financial services market.
The PaySpace Magazine editors figured out what BigTech is and why banks should be wary of it.
What is BigTech
Unlike the already familiar FinTech, BigTech is not a separate field of activity. Big Tech is a term commonly used to refer to large tech companies that have overwhelming influence.
Excessive influence refers to the ability of a company to seriously influence the markets it enters into. Notable examples: Facebook, Amazon, Google and Apple (FAGA).
For example, Apple once completely changed the course of the game in the world of music, creating iTunes, and now it is trying to do the same, but in the media sphere, introducing a subscription system - Apple News +. At the same time, dictating their own rules, which not everyone likes. But due to the influence of the company, the media have to put up with them.
According to the latest information, from a subscription to Apple News +, the company plans to take 50% of the commission on sales, and distribute the remaining 50% of all revenue to publisher partners.
The subscription price is $ 9.99 per month. Some publishers charge more for a subscription just for their own publication: Financial Times - from $ 6.45 per week, Quartz - $ 14.99 per month, Bloomberg - from $ 9.99 per month.
The situation is similar with the rest of the companies related to Big Tech, just the markets are slightly different.
FAGA Market Cap as of March 27, 2021 (Billions)
Facebook is trying to completely control the online advertising market. And Amazon and Google seem to have decided that there should not be a single market in which they are not represented.
Despite the fact that 2018 was not the easiest year for the Big Five due to a sharp drop in shares, they should not be discounted. Especially in light of Apple's recent presentation.
But these are only American giants. The Asian market, for example, lives by its own laws, with its own players who are capable of no less serious influence on the spheres that they develop.
For example, Tencent, which owns WeChat, has already taken over the multi-billion dollar Chinese market. Alibaba Group, which is doing everything in order to expand its sphere of influence also to the United States and Europe. And Grab Financial, which has grown from a taxi service to a financial services company.
We should be everywhere
The main distinguishing feature of BigTech is its desire to be present in absolutely all markets. This desire is backed up by real possibilities. The turnover of companies allows you to spend huge sums on the development of new areas, and the brand - to force its customers to consume all new products under the same brand.
The projected total transaction amount in the digital payments segment.
The financial market BigTech also could not ignore. Today, most American representatives of BigTech offer only some functionality. However, Apple's presentation showed that the financial market is now one of the priorities for IT giants.
USA
Apple has moved far beyond its competitors in the financial market.
Initially, the company simply launched its mobile payments system, which works with banks. It is noteworthy that it was not Apple that advertised its new product to banks, but the banks fought to provide this functionality to their users earlier than competitors.
Now 43% of iPhone owners use Apple Pay. A year ago, their number was only 7%. And the company does not plan to stop there.
This is evidenced by the recently introduced Apple Card, the possibilities of which we have already written about earlier. And this is just the beginning.
It is unlikely that Apple's rivals from FAGA will sit on the bench and hand over such a lucrative market to the Cupertino-based company.
In turn, Facebook focused its efforts not only on fiat money, but on virtual money. The company is hard at work developing a cryptocurrency for its WhatsApp messenger. And the transfer of fiat funds is already available to the residents of India.
Facebook is hoping to get a serious stake in this country. Why there? There are several reasons:
The projected number of users in the mobile POS segment.
Google has a huge number of Android phone users in its arsenal and its own mobile payment system Google Pay. Amazon has a recurring payment service, Amazon Payments, and has millions of customers who shop every day.
Asia
In the Asian market, BigTech is now at its peak. Especially in the financial sector. While American companies are just beginning to develop a new market, Asian companies have already managed to gain a foothold here. And not least because of the lack of competition. For example, in China there is a ban on a huge number of popular foreign sites (Facebook, Twitter, Youtube, Instagram, Google, etc.).
A prime example is WeChat, owned by Tencent. Tencent owner Ma Huateng, by the way, is the richest man in China, his fortune is estimated at $ 38.8 billion.
WeChat has become the main payment method for billions of people. In the past year alone, the transaction volume on WeChat Pay increased 500% year on year, and the total transaction value increased 400%.
Now the company is aiming at going beyond the borders of Asia, and is positioning the connection of its product as an opportunity to increase the number of customers at the expense of Chinese travelers. In 2018, the number of service providers grew by 300%, and the number of sellers - by 700%.
While WeChat is focused on individuals, Malaysian Grab Financial has presented its roadmap, according to which the main priorities for them now are lending and insurance, with an emphasis on small and medium-sized businesses.
Also, don't forget about Alipay from Alibaba Group, which recently received a license to issue electronic money and decided to go beyond the Asian market.
The most popular electronic payment systems in China (2019)
Recently, Alipay has been steadily appearing in new European markets, and in terms of the number of users in China, the payment service from Alibaba managed to overtake even the stable leader WeChat.
Considering all the facts and statistics, the US authorities are not in vain afraid of BigTech's influence on the financial sector, but it is too early to talk about the consequences of this. What matters is how traditional banks react to new competitors.
BigTech: What a real competitor to traditional banks looks like.
The US Financial Stability Board (FSB) has warned banks about who could become their real competitors. According to the FSB, traditional banks should be wary not of fintech companies, as is commonly believed, but of BigTech's likely entry into the financial services market.
The PaySpace Magazine editors figured out what BigTech is and why banks should be wary of it.
What is BigTech
Unlike the already familiar FinTech, BigTech is not a separate field of activity. Big Tech is a term commonly used to refer to large tech companies that have overwhelming influence.
Excessive influence refers to the ability of a company to seriously influence the markets it enters into. Notable examples: Facebook, Amazon, Google and Apple (FAGA).
For example, Apple once completely changed the course of the game in the world of music, creating iTunes, and now it is trying to do the same, but in the media sphere, introducing a subscription system - Apple News +. At the same time, dictating their own rules, which not everyone likes. But due to the influence of the company, the media have to put up with them.
According to the latest information, from a subscription to Apple News +, the company plans to take 50% of the commission on sales, and distribute the remaining 50% of all revenue to publisher partners.
The subscription price is $ 9.99 per month. Some publishers charge more for a subscription just for their own publication: Financial Times - from $ 6.45 per week, Quartz - $ 14.99 per month, Bloomberg - from $ 9.99 per month.
The situation is similar with the rest of the companies related to Big Tech, just the markets are slightly different.
FAGA Market Cap as of March 27, 2021 (Billions)
Facebook is trying to completely control the online advertising market. And Amazon and Google seem to have decided that there should not be a single market in which they are not represented.
Despite the fact that 2018 was not the easiest year for the Big Five due to a sharp drop in shares, they should not be discounted. Especially in light of Apple's recent presentation.
But these are only American giants. The Asian market, for example, lives by its own laws, with its own players who are capable of no less serious influence on the spheres that they develop.
For example, Tencent, which owns WeChat, has already taken over the multi-billion dollar Chinese market. Alibaba Group, which is doing everything in order to expand its sphere of influence also to the United States and Europe. And Grab Financial, which has grown from a taxi service to a financial services company.
We should be everywhere
The main distinguishing feature of BigTech is its desire to be present in absolutely all markets. This desire is backed up by real possibilities. The turnover of companies allows you to spend huge sums on the development of new areas, and the brand - to force its customers to consume all new products under the same brand.
The projected total transaction amount in the digital payments segment.
The financial market BigTech also could not ignore. Today, most American representatives of BigTech offer only some functionality. However, Apple's presentation showed that the financial market is now one of the priorities for IT giants.
USA
Apple has moved far beyond its competitors in the financial market.
Initially, the company simply launched its mobile payments system, which works with banks. It is noteworthy that it was not Apple that advertised its new product to banks, but the banks fought to provide this functionality to their users earlier than competitors.
Now 43% of iPhone owners use Apple Pay. A year ago, their number was only 7%. And the company does not plan to stop there.
This is evidenced by the recently introduced Apple Card, the possibilities of which we have already written about earlier. And this is just the beginning.
It is unlikely that Apple's rivals from FAGA will sit on the bench and hand over such a lucrative market to the Cupertino-based company.
In turn, Facebook focused its efforts not only on fiat money, but on virtual money. The company is hard at work developing a cryptocurrency for its WhatsApp messenger. And the transfer of fiat funds is already available to the residents of India.
Facebook is hoping to get a serious stake in this country. Why there? There are several reasons:
- firstly, the popularity of the messenger. In India, WhatsApp is used by over 200 million users (more than 20% of all clients of the messenger)
- secondly, India is the leader in terms of the volume of monetary transactions. According to the World Bank, in 2021, local residents made transfers worth $ 69 billion
The projected number of users in the mobile POS segment.
Google has a huge number of Android phone users in its arsenal and its own mobile payment system Google Pay. Amazon has a recurring payment service, Amazon Payments, and has millions of customers who shop every day.
Asia
In the Asian market, BigTech is now at its peak. Especially in the financial sector. While American companies are just beginning to develop a new market, Asian companies have already managed to gain a foothold here. And not least because of the lack of competition. For example, in China there is a ban on a huge number of popular foreign sites (Facebook, Twitter, Youtube, Instagram, Google, etc.).
A prime example is WeChat, owned by Tencent. Tencent owner Ma Huateng, by the way, is the richest man in China, his fortune is estimated at $ 38.8 billion.
WeChat has become the main payment method for billions of people. In the past year alone, the transaction volume on WeChat Pay increased 500% year on year, and the total transaction value increased 400%.
Now the company is aiming at going beyond the borders of Asia, and is positioning the connection of its product as an opportunity to increase the number of customers at the expense of Chinese travelers. In 2018, the number of service providers grew by 300%, and the number of sellers - by 700%.
While WeChat is focused on individuals, Malaysian Grab Financial has presented its roadmap, according to which the main priorities for them now are lending and insurance, with an emphasis on small and medium-sized businesses.
Also, don't forget about Alipay from Alibaba Group, which recently received a license to issue electronic money and decided to go beyond the Asian market.
The most popular electronic payment systems in China (2019)
Recently, Alipay has been steadily appearing in new European markets, and in terms of the number of users in China, the payment service from Alibaba managed to overtake even the stable leader WeChat.
Considering all the facts and statistics, the US authorities are not in vain afraid of BigTech's influence on the financial sector, but it is too early to talk about the consequences of this. What matters is how traditional banks react to new competitors.
