It's dawned on me, somewhat slowly, that readers may find it useful to follow up on the peripheral topics Rick Huckstep and I talk about each episode. From this newsletter onwards, I'll include links where it's useful to do so. For instance, in episode 36, Rick shares his fascination with the Rewind Pendant, and I offer my thoughts about having watched half of the Lex Fridman virtual interview with Mark Zuckerberg. (I'd love to hear what you thought of that interview, too.) At the end of the show, we mention Arc's Max AI implementation, and Jack Conte's excellent video, 'Patreon is changing'.
The rest of the show is a water strider's view of the influence of big tech in the formation and subsequent surge of fintech. Rick posits that without the global financial crisis of 2008, and the coincidental launch of the iPhone the year before, financial technology may not have flourished as it has done in the years since.
Our discussion takes a number of turns, revealing just how much has changed for some, yet remains different or undiscovered for others. My pre-show notes for Big Tech Little Tech episode 36 present a few leaping-off points if you're considering a podcast or article of your own. Please share your work with me afterwards, as I'm always interested in different perspectives.
As usual, you can see us in virtual person if you subscribe and have become a Patreon subscriber, where a paltry £2 a month provides extended video versions, transcripts and other goodies.
What’s changed in banking since the iPhone was launched in 2007?
APP STORE The App Store created an ecosystem whereby developers could create financial apps to help people manage their finances. Combined with the UK’s open banking initiative, startups could produce apps that connected with consumers’ banks to help with budgeting, tax, expenses, investments, savings and so on. Benefits: Convenience, accessibility, real-time transactions
How has banking been influenced by consumer behaviour and Big Tech companies?
APPLE Apple has been busy creating ancillary services and products that complement the iPhone, such as Apple Pay, Apple Card and Apple Pay Later.
Apple Financial Services for schools, universities and businesses to support their teaching and learning goals
Connected Cards is a UK-only service. Apple’s Wallet app will show us up-to-date information on those cards we’ve connected, and is available because of open banking.
Express Mode gets you through transport barriers by paying with your Apple Watch or iPhone without having to open an app.
Apple's partnership with Goldman Sachs is centred around the Apple Card, which is only available in America.
AMAZON Amazon has made significant achievements in the payments space, such as Amazon Pay, Amazon Payments (use Amazon accounts for subscriptions), and its competition with PayPal, allowing third parties to make products available through Amazon. This changed shopping behaviours and retail finance.
Amazon took personalised shopping to the next level.
Changed shipping expectations.
Ecommerce.
UBER
Uber Wallet is a digital wallet that lets drivers track their earnings and spending history, as well as manage and move their money.
Uber Debit Card (now GoBank) lets drivers access earnings and get cash back on gas and EV charging.
META Meta, the parent company of WhatsApp, has been rolling out payments into WhatsApp in various countries. It’s available in Brazil, Singapore (partnership with Stripe) and the rollout may continue.
ALPHABET-GOOGLE Google isn’t a provider of financial services itself, but focuses instead on providing technology solutions to financial services organisations. It’s positioned itself as a vendor.
Google Cloud offers solutions for financial services organisations to drive data-driven insights, analytics, security and compliance.
Google Pay (formerly Android Pay) is available in 71 countries.
Google has chosen India as its global fintech operations hub, where companies can build apps providing consumers with everything from loans to welfare payments.
Open banking is a system that allows third-party access to our financial data. This happens through application programming interfaces (APIs). Benefits: Wide range of products and services, better financial management, personalisation
E-WALLETS
E-wallets are the leading payment method in China and India for ecommerce purchases and across all activities. By contrast, they are lagging in Hong Kong and Brazil. (Bain & Company, 2023)
There’s no outright leader, according the Bain & Company, but PayPal “stands as the most widely popular for online purchases, either as a channel for the consumer’s credit card or as a wallet loaded with funds”. Apple Pay is a leader in stores in developed markets. Bizum in Spain, and WeChat Pay and Alipay in China.
NEOBANKS
A neobank is a type of direct bank that operates exclusively using online banking without traditional physical branch networks. Examples: Chime, Monzo, Revolut, Dave
How do people bank where Big Tech’s arms don’t necessarily reach?
UNBUNDLING Unbundling refers to the process of breaking down traditional banking services into smaller, specialised services that can be provided by different companies. People can pick and choose the services they want rather than be tied to a single bank or financial institution that provides everything. Examples: Monzo, Starling, Venmo, Wise, Robinhood
DEVELOPING MARKETS It’s most pronounced in developing markets, where lower-income consumers had long been underserved by banks and now find access through neobanks and other online companies. The fragmentation of banking is more pronounced in developing markets such as Brazil and India, where large groups of lower-income consumers have long been underserved by banks and now find access through alternative, digital-native banks. Benefits of neobanks: Modern, flexible technology, more affordable products
How will Gen A consumers manage their finances?
Gen A and Gen Z are digital-first people. Research says they want services that are easy to use, incorporate rewards and have unique features that improve the customer experience.
Key considerations: Social influence, firm reputation, promotion, features and rewards all have a significant impact on the intention to use digital-only banking. Positive word-of-mouth is a crucial factor in driving adoption among younger generations.
CRYPTOCURRENCY Gen A is highly interested in cryptocurrency, seeing it as a viable investment option. Are financial providers doing enough to adapt their products and services?
I've worked in and around fintech since 2015, so it's a topic I know reasonably well. As with most of our discussions on the show, the absence of a deep dive leaves room for exploration across new episodes, and episode 36 is no exception. My experience in the fintech sector will rear its interesting head again at some point, perhaps influenced by something I read between now and then. Perhaps something you wrote?
Until next time, stay safe, keep smiling and enjoy the details.
