Amazon and Google: The Fintech Data Vampires of the West
Not so in India where both have major payment operations thanks to UPI
Amazon and Google’s approaches to fintech depend on the market, and for most of us in the West, it's enough that they facilitate the transaction and feed on the data, but that doesn’t hold for India and other developing nations.
Neither company is rushing into financial services in the West; the fintech boom has gone bust, GenAI has taken over, and both are focusing on cutting costs.
This leaves them sucking on fintech data like a vampire and taking on partners to do the actual finance, at least for now.
The best example of this behavior is Apple, which actually ran away from fintech when it closed its US BNPL offering, only to take on the services of Affirm. There is also the incredible retreat of Goldman Sachs from retail banking.
Two factors contribute to Amazon and Google’s fears of getting too directly involved with fintech: First, a regulatory environment that makes their participation as financial services players expensive due to reserve requirements, and second, the realization that margins are tight, as Goldman learned.
What is interesting is that in India and the developing world big tech hasn’t yet given up on fintech, more below.
👉TAKEAWAYS
🔹 Amazon:
Narrowing its strategic focus to cut losses and reduce expenses means that fintech is not a priority activity.
Global fintech activity gives Amazon footholds in growth markets
India is Amazon’s primary international fintech market with LatAm and MENA operations.
Local partnerships are a key strategy in emerging markets.
Cashierless tech is a potential growth area in the US
Financing support for SMEs through Parafin and Lendistry are examples of on platform partnerships. More are expected.
🔹 Google:
Google is focusing on AI development and like Amazon is cutting costs, reprioritizing and streamlining which means fintech is out.
Google does have its wallet which it is now expanding to include more services.
New wallet services include transit cards, proof of vaccine, health insurance ID, and driver’s licenses used for identity in some states.
All of these use cases provide Google with data on your behavior and, of course, payments.
Google Wallet is a major player in India’s payment market with a 37% market share.
Meanwhile, Google continues to churn out patents in payments and invests in fintech, even if only for the returns.
👊STRAIGHT TALK👊
While fintech is not at the top of the mind for big tech in the West, the opposite is true in the developing world.
Both Google and Amazon are payment providers in India where they use UPI and are experimenting with India’s CBDC trial. Google is the larger of the two, with more than a third of India’s payment market.
Another example is Facebook’s WhatsApp, a major payment platform in Brazil with some 96% of the population using the app.
These examples show that big tech is not at all afraid of entering the payment space if the regulatory conditions are favorable.
What we have to note is that both India’s UPI and Brazil’s Pix allow for account-to-account transfers, and while the US has this with FedNow, it can only be accessed by banks.
The game-changer for big tech will be the new digital euro, which will allow Apple and Google digital wallets to participate in actual cash transfers rather than relying on card networks.
Until that happens, big tech in the West will have to be content to be a vampire sucking the data out of your finances.
That isn’t so bad; remember, vampires almost never die!
Did you make it this far? There are even more benefits waiting for you when you subscribe.
Don’t get left behind: Get the expert insights on Central Bank Digital Currencies (CBDC), AI, Payments, and Financial Inclusion, that you need to stay ahead of the curve, all delivered directly to your inbox weekly;
See the future: Profit from a unique point of view directly from Asia that focuses on how the region is “leapfrogging” the West and showing us the future;
Be independent: My message doesn’t follow corporate diktats it’s a message that’s often controversial and does not conform with mainstream outlets;
Be prepared: CBDCs are no longer theoretical but coming soon, so keep up with the latest developments on the digital euro, yuan, sterling and dollar;
Understand AI: In-depth analysis of how our AI revolution impacts finance and will change how we interact with financial services.
Trust: My writing is trusted by over 50,000 executives, innovators, investors, policymakers, journalists, academics, and open-minded crypto hodlers daily
Subscribing is free, but I am honored by readers volunteering to opt for a paid subscription to recognize my high-quality writing. Thank you!
Sponsor Cashless and reach a targeted audience of over 50,000 fintech and CBDC aficionados who would love to know more about what you do!
