Disrupting Retail Banking – The Era of Big Tech

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This report provides in-depth analysis into the financial services strategies of technology companies. We look at their paths up until now, the products and services they have developed, their likely next moves, and how effective they will be at displacing the primary account relationship incumbent banks currently hold.

The increasing role technology plays in 21st century life has led to the banking sector being the latest industry to be disrupted. This has led traditional incumbent banks to make technology a key part of their strategic goals, including dedicated technology departments and chief technology officers as well as partnerships with technology giants. As technology and particularly data play an even greater role in financial services, it has become apparent that very little stands in the way of technology giants offering financial services themselves. They have the reach, resources, and brand to entice customers, who are more willing than ever to try new offerings due to the stagnant levels of service they have received over the last two decades.


– Tech companies are developing ecosystems on their platforms through which they hope to extract as much value from customers as possible. Previously tech companies only sought to collect user data, which they often sold on to third parties. Now data is increasingly being used internally to understand how to influence customer decision-making – particularly as it relates to the integrated marketplaces on their platforms.

– The approach to revenue generation by big tech companies has been monolithic. All companies have effectively prioritized growth at the expense of revenue, and have not monetized the vast majority of financial services products they have launched.

– While the likes of Facebook, Amazon, and Google are all entering financial services, they have each done so from different angles. This suggests there is no one way for such companies to enter the industry, meaning the threat to incumbents is larger than anticipated and cannot be precisely mapped.

Reasons to Buy

– Gain an understanding of the technology companies entering financial services, as well as the approaches and products they have used to gain a foothold.

– Realize which tech companies are the biggest threats to incumbent banks and the timeline of how these threats are emerging.

– Understand the potential embedded finance has for technology companies, and the ease with which such companies can move into financial services.


Table of Contents

Table of Contents

1. Executive Summary

1.1 Market overview

1.2 Key findings

1.3 Critical success factors

1.4 Competitor update

2. Survey Data

3. Google

3.1 Google’s most significant movement into financial services has been via partnerships with incumbent banks

3.2 Due to Google’s size, brand, and history it is targeting the entire market, not a specific demographic

3.3 Google offers complementary products and a strong user experience/interface

3.4 Google’s marketing efforts have targeted existing customers as opposed to acquiring new ones

3.5 Google has multiple revenue streams, with the potential to monetize Google Pay

3.6 Google is best placed to disrupt financial services, but must be wary of anti-trust regulation

4. Amazon

4.1 Amazon has developed payment and lending infrastructure and is set to launch BNPL and banking services

4.2 Amazon is prioritizing existing customer and merchant relationships to increase ecosystem activity

4.3 Amazon’s financial services are differentiated by the complementary use of them in the Amazon ecosystem

4.4 Amazon’s marketing strategy has involved developing deeper relations with existing customers and merchants

4.5 Amazon’s revenue from financial services is small but has potential to be significant if further monetized

4.6 Amazon faces regulators seeking to level the playing field between ecommerce and physical stores

5. Facebook

5.1 Facebook entered financial services with payments infrastructure

5.2 Facebook users are incredibly diverse in terms of age and geography

5.3 Facebook’s services are differentiated by their links to WhatsApp and Instagram, as well as design superiority

5.4 Facebook is marketing new services to existing users, particularly in developing markets

5.5 Facebook’s scope to monetize financial services is significant but could slow growth

5.6 Facebook’s impact on democracy has regulators around the world bearing down on the company

6. Uber

6.1 Uber has entered financial services as a platform for its

3.9 million drivers worldwide

6.2 Uber’s main demographic is its drivers, particularly in developing markets

6.3 Uber is differentiated via its relationship with its drivers and its superior user experience

6.4 Uber’s marketing strategy for financial services has focused on its drivers

6.5 Uber’s financial services would likely not be monetized so as to boost growth

6.6 Uber expects to reach profitability at the end of 2021, after which financial services projects may be resumed

7. PayPal

7.1 PayPal is evolving from payment processor to super app as it launches new products and makes significant acquisitions

7.2 PayPal initially targeted online shoppers but is now following a more blanket customer acquisition strategy

7.3 PayPal’s services are differentiated by their simplicity and security

7.4 PayPal’s marketing strategy has involved referral bonuses, but now focuses on existing customers

7.5 PayPal generates revenue from the various services it offers, which often include a fee or interest rate

7.6 PayPal aims to become a super app, and the acquisition of Honey points to an embedded ecommerce approach

8. Klarna

8.1 Klarna has gone from escrow service to bank, and could become a super app with an ecommerce platform

8.2 Klarna’s main demographic is young people who shop online and need flexible finance options

8.3 While BNPL is being widely adopted, Klarna is unique in that it offers an ecommerce app

8.4 Klarna’s marketing strategy involves mutually beneficial partnerships with retailers

8.5 Klarna generates revenue from merchants and consumers

8.6 Klarna is expected to roll out banking services across Europe and launch complementary products such as PFM tools

9. Yolt

9.1 Yolt entered financial services as an AISP but is becoming more action-oriented

9.2 Yolt’s target demographic is younger customers who need to be able to plan their finances in detail

9.3 Yolt combines data from multiple accounts and allows customers to take action via its platform

9.4 Yolt has outsourced its marketing activities and is targeting younger, tech-savvy customers

9.5 Yolt’s app is free but it has launched a number of services that have charges built in

9.6 With the backing of ING, Yolt could launch full retail banking services and incorporate them with the DealWise platform

10. Robinhood

10.1 Robinhood entered the market as a brokerage platform but has potential to bring banking services under its umbrella

10.2 Robinhood’s target demographic is young customers who have previously been excluded from financial services

10.3 Robinhood once differentiated via its free business model, but now relies on user experience and premium features

10.4 Robinhood has spent significant sums on advertising, as well as using referral bonuses and gamified waiting lists

10.5 Robinhood earns revenue from order flow generation and premium services

10.6 Robinhood is expected to launch an IPO this year and expand to Europe, having cancelled plans in 2020

11. Appendix

11.1 Abbreviations and acronyms

11.2 Secondary sources

11.3 Further reading

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List of Figures

Figure 1: Preference for transaction/savings accounts from big tech providers

Figure 2: Preference for budgeting tools from big tech providers

Figure 3: If you were to open any of the following financial products and services, which type of provider would you prefer to use?

Figure 4: Google timeline

Figure 5: Amazon timeline

Figure 6: Facebook timeline

Figure 7: Uber timeline

Figure 8: PayPal timeline

Figure 9: Klarna timeline

Figure 10: Yolt timeline

Figure 11: Robinhood timeline

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