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Why Big Tech Is Getting Into Finance | WSJ

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(upbeat music) – [Narrator] Big Tech has its eyes set on your wallet Apple has a credit card

Facebook is trying to introduce its own currency And Google has plans to offer checking accounts to users of its digital wallet in 2020 You can do a lot with a wallet in your phone, like boarding a train or (electronic ding) So tech firms are offering services that are usually associated with banks, but they're doing it differently – It's really about data

When a company like Apple or Google processes a payment for you, they find out a lot about you They know what you bought, where you bought it, what time of the day or what day of the month you're likely to spend money, and that's really valuable information for advertisers – [Narrator] Also, banking is another way for tech firms to draw customers further into their universes – So Facebook started out as a way to talk to your friends, and then became a place you shared baby photos with your grandparents And now you can shop on Facebook properties, you can message, Instagram, WhatsApp

Amazon is the same way It started out as a big store, and now they make home speakers, they make original movies and television shows So these companies all started off with one thing and they're adding more things around it and finance is kind of the last frontier – [Narrator] As more people change their banking habits, tech companies say they can bring something to the table Google says it will build helpful tools while relying on partnerships to navigate the financial world

For its part, Apple promises to eliminate fees for its credit card, and give you cashback instantly And the Apple Pay app will have charts that help users track their buying habits Meanwhile, the Facebook-backed Libra Association says that using a blockchain to process transactions could make cross-border payments cheaper and faster The company says its planned cryptocurrency, Libra, could provide banking services for billions of people That plan has faced headwinds

Several early partners dropped from the project and US Fed chairman Jerome Powell raised concerns with the plan, saying that Facebook's size could make Libra immediately, systemically important That size is on display in the other services too According to projects from Juniper Research, Google Pay is on track to have 100 million users worldwide in 2020 By that time, Apple Pay could have 227 million users Both would be huge increases from 2018

– These tech companies are already really big and some regulators think too big Several US regulatory bodies already have antitrust investigations into Google, Apple, Facebook and other big companies – [Narrator] Their push into banking could sharpen those concerns And public trust is an issue too A poll from McKinsey and Company suggests that a slight majority of respondents would trust Google and Apple to handle their finances, but Facebook fared less well

– Some people are already wary of giving tech companies access to their location and their photos Financial data is just way more personal – [Narrator] More concerns over privacy and power will be on display as tech firms get into finance The data are valuable, and increasingly they're in the hands of a few tech companies (upbeat music)

Source: Youtube

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