In 2019, one of the biggest storylines was big tech’s move into fintech. Over the span of the year, Google revealed it was working on checking accounts with Citi, Apple launched a credit card in partnership with Goldman Sachs, and Facebook launched Facebook Pay and took ambitious first steps toward creating a digital currency.
Why all the sudden fintech moves?
In recent years, a wave of fintech startups has shaken up the competitive landscape. Private funding to VC-backed fintech more than doubled year-over-year in 2018, totaling $41B. Suddenly, startups’ digital experiences were threatening incumbents across personal finance.
Payments has been a natural focal point. As payments innovation rippled through new markets like the UK and India, incumbents like Visa have funneled 57% more dollars into private companies year-over-year in 2019.
The payments model is especially ripe for big tech, with the digital payments market representing a massive $3.6T opportunity. With superior UX offerings and an ability to route the traffic of millions of existing customers, tech giants can quickly launch new products and play the long game in the low-margin, high volume world of payments.
In 2020, big tech has continued its advance into finance, with an emphasis on payments and emerging markets. (We’ve previously covered how big tech is attacking financial services and drilled into efforts from Facebook, Apple, Google, Amazon, and Ant Financial.)