One of the first posts I ever wrote on Lend Academy back in 2010 was about mulling the idea of Facebook becoming a bank. Of course, I didn’t mean a brick and mortar type of bank but a digital bank of some kind. Seven years later this has obviously not come to pass but tech behemoths like Facebook are showing more interest in financial services.
GAFA is an acronym for Google, Amazon, Facebook and Apple, the largest tech companies in the world. Historically, these companies had stayed out of finance for the most part but in recent years that has changed.
Google and Apple both have payments products that have gained some traction in this country. Google and Amazon have small business lending arms that are providing financing to their existing small business clients. Facebook has their popular Messenger program that is starting to attract new initiatives from both fintech startups and big banks.
I would add PayPal into the mix here as well. They are on a fantastic run lately and their core payments business continues to expand. They also have a successful small business lending operation but like Amazon and Google this is focused on extending credit to their existing customers. What would happen if these companies decided to expand their focus beyond their own customers and take on banks directly?
McKinsey Report on Banking
Last week McKinsey released their annual banking report and it has created quite a stir in banking circles. McKinsey argued that platform companies like Amazon are well positioned to challenge big banks: [Read more…]