Report: Big Tech Will Expand Further into Finance in 2020

Facebook chief Mark Zuckerberg
JOSH EDELSON/Getty

According to a recent report, the Masters of the Universe in Silicon Valley have plans to further expand into the world of finance in the new year — falling just short of opening their own banks.

A recent report from CNBC claims that Silicon Valley tech giants are likely to expand their business into the world of finance even further in 2020, but many want to avoid the hassle of becoming a fully-fledged bank. With Facebook announcing its own cryptocurrency, Googles plans to introduce consumer bank accounts in collaboration with Citibank, and Apple’s new credit card in partnership with Goldman Sachs, finance seems to be a major focus for tech firms.

CNBC writes:

 

Though their products are different, both firms share something in common: they have no plans to become regulated financial institutions like Citi or Goldman. While Big Tech — a group of companies that includes Google, AmazonFacebook and Apple — will undoubtedly push deeper into finance this year, their progress in banking will be “more of a slow creep than big strides,” said Sarah Kocianski, head of research at fintech consultancy 11:FS.

“The big tech firms will continue to add services that are peripheral to banking to their existing offerings, without going full-stack banking,” she said. “The headache of getting, and maintaining, a banking license would likely be considered too big a risk for these companies. Instead, they will continue to operate with licensed partners.”

But, Accenture’s global payments lead, Sulabh Agarwal stated when asked that it makes little sense for tech firms to become banks. “Do I expect them to become banks? I don’t think so do. I expect them to create new services to enhance their propositions,” Argawal stated.

Facebook is making moves on two fronts in the world of finance, with its digital currency Libra and with its payment processing platform Facebook Pay. CNBC writes:

 

“The theory goes that if 2 billion people were to withdraw their deposits from the banking system and move them into Libra tokens, you’d effectively have a run on the banks,” said Simon Taylor, co-founder and blockchain lead at 11:FS. “Facebook is absolutely big enough for that to be plausible, but whether or not it happens depends much more on what consumer problem is being solved.”

Aside from libra, Facebook is also consolidating its payment products under a new brand called Facebook Pay. Uber, like its Southeast Asian competitor Grab, is moving further into finance with a division called Uber Money that houses a digital wallet and upgraded payment cards. They’ll face competition from the likes of Google Pay and Apple Pay in the U.S. and Chinese payment apps like Alipay and WeChat Pay.

E-commerce giant Amazon is already in the process of lending out money but has yet to break into consumer banking. It should be noted that Amazon at one point set up a student loan scheme in 2016 with Wells Fargo which shut down shortly afterward. Sarah Kocianski, head of research at fintech consultancy 11:FS, stated that there was “every reason to suspect they’ve learned from that.”

Read the full report at CNBC here.

Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan or email him at lnolan@breitbart.com

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