Posted on Nov 22, 2020 at 11:22 a.m.
By announcing the possibility, from 2021, of opening bank accounts from its Google Pay application, the Mountain View firm risks making many unhappy. Banks first – at least those which have not signed a partnership with the technological giant – because it is the arrival of a major competitor in their core business. But also financial regulators.
The latter are indeed more and more vigilant in the face of the arrival of GAFA in their preferred territory, considering that the latter pose a risk to the stability of the financial system. Especially since by tackling payment first, the GAFA took their first steps in the sector without having to comply with the most restrictive rules, unlike the historical players.
Helped by their large customer base, they managed to quickly gain market share, to the point of making traditional banks outdated, as is the case in China for Ali Pay and WeChat Pay. So much so that regulators had no choice but to bang their fists on the table when some giants crossed the yellow line.
The latest episode of this balance of power occurred at the beginning of the month, when the Chinese regulator, in a spectacular gesture, halted the IPO of Ant Group, the subsidiary of the giant Alibaba, at 48 hours before this. which was to be the largest IPO in history at $ 35 billion. No way for the power to lose control of the juggernaut behind Alipay.
In the sights of Beijing: the powerful billionaire Jack Ma, founder of the e-commerce giant that has become the richest fortune in China, but also the weight of Ant Group and its 711 million active users, which is increasingly more shade for traditional Chinese banks with its increasingly diversified services, ranging from payment to credit through savings.
Chinese authorities have said that in the future Ant Group will face more scrutiny and the company may be subject to the same capital and leverage restrictions as banks.
This tightening of screws delighted traditional players. ” In the past, many technology groups have benefited from not having the same regulatory regime and supervisory overheads as banks. “, Said Piyush Gupta, head of DBS Group Holdings on Thursday, when his bank lost market share in Southeast Asia to the benefit of Ant in particular.
Digitization of transactions
Another symbol of the increased vigilance of regulators: the authorities’ outcry against Libra, the digital currency project developed by Facebook. Faced with such resistance, Mark Zuckerberg’s group was forced to drastically lower its ambitions. ” There was a realization that by letting the digital giants act, there is a real risk of stability, but also of sovereignty », Decrypts a connoisseur of the sector.
Google’s latest banking initiative shows the tech giants’ appetite doesn’t stop there. This does not risk reducing the vigilance of financial regulators. Especially since the covid-19 crisis has accelerated the digitization of transactions, with the explosion of contactless payments in particular. This is even more likely to tip the balance of the payment sector in favor of the tech giants.