The finance industry has seen a lot of revolutions ever since it was invented and structured rationally. Over the years, new technologies have been introduced that simplify the lives of consumers and some complicated banking policies for finance institutions.
This surge of bright ideas and technologies being introduced to the finance industry has not stopped; instead, it is growing stronger. One of the most recent developments includes the collective efforts of big tech invading the finance industry.
Here are the advantages and disadvantages of big tech in this industry.
What is big tech?
Big Tech is a phrase that best describes some of the largest tech companies including Google, Amazon, Apple, Facebook, and Microsoft. These companies have been grouped as part of big tech because of their influence and dominance in their respective industries.
Also, big tech tries to widen its reach by any means possible in a manner that seems pretty much like that of a monopoly. The focus of big tech in finance is just another highlight of how these companies are trying to dominate almost all sectors.
Services like Google Pay and Apple Pay are just the tip of the iceberg in terms of finance initiatives that have been launched by these dominant organizations. Another very important identifying factor of big tech is their geographical reach that has been widened to be global over the years.
Some have even alluded to saying these companies are shaping the way society is progressing and that is true.
Why big tech is getting into finance
The mandate of big tech companies has always been clear, simplifying large problems with simple solutions that are user-friendly. These large organizations identified a gap in the finance industry and that is why big tech in financial services is starting to become a phenomenon.
Platforms like Facebook Pay and Uber Money are other examples of why big tech banking is the goal of large technology organizations. They provide solutions for their community that simplify everyday problems they’re facing.
For example, Facebook Pay makes it easier to clear payments of transactions made on their Marketplaces platform. Whereas, Uber is aiming at creating a solution for its drivers and maybe as time goes for customers as well.
Amazon has also indicated its purpose of getting into finance and it is assisting merchants on this platform to grow their businesses by offering business short and mid-term lending options.
The threat big tech is posing to banks
Banks have faced a lot of threats of losing business to fintech solutions that have become so plenty nowadays, such as digital wallets. However, the war that big tech is waging seems to be far larger than the one fintech startups are fighting.
Therefore, big tech seems to be more threatening than fintech to banks. The reason why big tech is getting into finance indicates that these companies would like to completely monopolize this industry.
Most of the proposed solutions and some that have been unrolled seem to be heading towards completely bypassing the normal banking system. Some of the proposed solutions have partnered with a select few banks leaving many of the smaller financial institutions out in the cold.
By the looks of things, big tech solutions will leave only the mortgage sector untouched because of its widespread reach in different finance subsectors. That threatens all the profits made by daily financial transactions and business lending solutions that banks have profited on in the past.
Financial data management by big tech
The biggest worry that consumers have about big tech’s hedging into finance is big tech’s ability to manage all their financial data appropriately. It is a fact that can’t be denied that some of the companies in big tech have been tainted with negative headlines regarding breaching privacy and data policies.
Therefore the concern of big tech’s financial data use is valid. People are concerned about what big tech might do with this data, such as using it to refine their personalization algorithms or for other research purposes.
Some might view this as a blessing but others are concerned about the seemingly infinite power that big tech will possess. However, big tech finance solutions have worked great, such as Google Pay and Apple Pay, since these platforms have simplified the lives of customers greatly.
At the same time, these platforms have also complied with regulatory authorities governing their respective solutions.
The bottom line
Big tech is here to stay in the finance industry and this means good for consumers but not so much for banking institutions. The solutions that these large companies are proposing or already have, in effect, have simplified daily problems that are incurred in this digitally-centric world. Others are concerned about trusting big tech with their financial data, whereas some are content with the end results of this development.