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Banks and disintermediation, Part One

Forrester just produced a report about why Google will not become a bank, but will focus upon leveraging their information services around transactions.

It’s an interesting viewpoint and one I agree with.

As blogged here regularly, Google is unlikely to ever become a bank.  They would lose too many friends.  But Google will become an enrichment service around banking.

What is that enrichment service?

It’s about all the things that make our financial life meaningful.

What we’re buying, where, when, why and how.

Google already does much of this behind the scenes.

They’ve decimated markets, not be copying those markets but by reinventing them.

Take Satellite Navigation services.

Who would have ever thought Google would be my satnav and yet that’s exactly what they are, because they use real-time data to be meaningful.

It’s one step up from Google Maps, to offer real-time maps to destinations.

Then it’s one step up from providing satnav to delivering a car to me.

Driverless cars just gained government approval and, before you know it, the driverless Google car with intel inside is a reality.

That means they disrupt the car industry.

What else is Google up to?

Well, looking at their Labs, they’re looking outside the box.

Cures for cancer, elevators to space, smart homes and robots are all in the pipeline.

Some may think these ideas outlandish, but look at some other outlandish ideas.

Attacking Apple, when Apple dominated the mobile phone space.

Many thought Android a ridiculous idea when it launched, due to the virtual monopoly of the iPhone explosion.

Now, the majority of folks are using Android, thanks to Samsung, and Apple’s shine has tarnished somewhat.

Take the idea of moving the internet into your sightline with a pair of glasses that are networked?

Many scoff at this idea, saying that these guys are Glassholes, and yet slowly and inevitably it is moving mainstream.

Does this mean that Google displaces the opticians market?

Possibly or, rather, it enhances the opticians market as we’ll all need a new pair of glasses with intel inside.

So Google is not a threat to banking per se, but more likely to be a leverage partner.

Integrate bank APIs into Google services and you’ll see your Google Calendar sprinkled with your financial transactions day-by-day.

Rather than logging onto your bank account, you just search “Spain” and you will see all of your spending on the last holiday.

Google Sync with Sage will ensure all your accounting and expense recording is managed automatically, with no manual effort required.

And Google will of course inform you of relevant services, so you need never look for an ATM or branch, it’s all just there in Google Maps.

This is where Google will strike to the heart of banking, as the bank becomes a back-end information feed to Google rather than the other way around.

Google enriches our lives with information: that should be their mission statement (their mission statement is actually “to organise the world’s information and make it universally accessible and useful”).

And with an annual R&D budget near $8 billion, they’ve got the deep pockets to do this well (as have Facebook, the nearest Google competitor out there, who have just stated that Facebook Messenger will enable payments).

If you’re interested, btw, here are the top 10 Google R&D Projects.

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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  • This is a smart post. One possibility here is that Google will develop a personal financial management platform (by integrating bank APIs — as you say). After all, Google is all about providing users with data, and that’s the heart of PFM.

  • Data. Enough said.

  • Interesting post. I agree that there is a lot Google could do with financial transaction data. Personally, I feel their main focus would be on using financial data to facilitate commerce. What would be better for a merchant than have their Google ad clicked on by a consumer and then have Google help that consumer see that they could afford the purchase based on their historical spending patterns.
    Of course, I think that is why PFM from their own bank or credit union will be more trusted than Google-powered PFM. Free services from Google always come with an information-sharing caveat. I would be surprised if many consumers would be allow Google that level of access to their financial information due to the perceived risk of sharing that data.

  • Is providing APIs to welcome the new overlords (and potentially add value) cannibalisation or the only way to survive?
    I believe it’s the latter, and for the ones that get there first, there is a huge opportunity… because Google aren’t the only platform out there that could improve the transactional nature of banking.
    What about Salesforce? What about Facebook? What about a push payments version of stripe.com?