In a recent post about the 3 Factors Disrupting FinTech, we covered one major element that could upset how Financial Technology apps perform: the entry of big tech companies into the space.

While they’ve actually been dipping their toes into Fintech for years, progress has been quite cautious and steady for the most part. 

What does this bode for Fintech startups? And how does one compete in the same space as these multinational behemoths with their massive customer bases and user data?



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How the Big Tech Firms Are Doing

To better understand how the landscape has changed, let’s take a look at how some of these corporations are faring with their Fintech offerings.

Google Pay: Banking in the Google Verse

In 2020, Google let users open a bank account through the Google Pay app via partnerships with Citi and Stanford Federal Credit Union — plus 11 new partner institutions coming in 2021. This mobile-first offering called Plex Accounts will be accessed via Google Pay or via debit cards designed by Google. But unlike traditional bank accounts, Plex will have no monthly fees, overdraft charges, or minimum balances. Added bonus: it lets users send digital payments to their friends — just like Venmo and Cash App.

Apple Card: Credit Card for Apple Addicts

In 2019, Apple launched its Apple Card in the US via a partnership with Goldman Sachs, giving consumers a credit card with no annual, late, international, or over-the-limit fees. Because Apple hadn’t made public its number of cardholders, in March of 2020, Forbes tech analyst Ron Shevlin used consumer research to estimate that 3.1 million people —about 2.2% of all American adults with a credit card—had the Apple Card.

It’s now a year later and the card has expanded its rewards program with even more partners and continues to be appealing to those who buy a lot of Apple products and services, but otherwise its 3% cashback rewards program is not as robust as those from other institutions that offer 4% cashback or higher.

Facebook Diem (FKA Libra): Digital Currency, Opposed

In 2019, Facebook announced it would enter the world of cryptocurrency with their stable coin named Libra. They framed it as an alternative to traditional banking, or as a way for millions of unbanked people to finally gain access to banking services. Of course, this was immediately met with opposition from lawmakers and financial institutions as it would essentially give the tech company a global financial system with its sheer number of users.

The company ended up scaling down their plans for the 2021 launch, even renaming the coin (and the association behind it) Diem, and prompting Financial Times to describe its descent as “from world changer to just another PayPal.”

PayPal: Now With Cryptocurrency

In October 2020, PayPal announced that all eligible PayPal account holders in the US could now buy, hold, and sell cryptocurrency directly using their PayPal account. And by early 2021, cryptocurrency will be available as a funding source for purchases at its 26 million merchants around the globe.

There are several problems with their offering, however. One: you can’t actually use cryptocurrency to buy or sell things via Paypal. Two: unlike other digital wallets, it appears Paypal can you lock you out of your account at any time.

Stripe Treasury: Giving Merchants Access to Financial Products

Stripe, via partnership with Goldman Sachs and Evolve Bank & Trust, now gives small business merchants access to financial products on platforms such as Shopify. These merchants can send, receive, and store funds. Meanwhile, these accounts earn interest, are eligible for FDIC insurance, and enable customers to have quick access to the revenue earned through Stripe.

Facebook Marketplace: Buying and Bartering, the Social Media Way

In 2016, Facebook launched Marketplace. Now 15% of Facebook users use it to shop, with around 800 million monthly users of just the Marketplace. For all intents and purposes, it has usurped the throne once held by Craigslist (although only in about 85+ countries). For those who have it, Marketplace allows you to browse through both new and used items for sale in your local region — and you have an option to pay without leaving the app.

While Marketplace is a great way to find used goods in your local area, it fails at actually making it irresistible (or even easy) for users to purchase items and pay for shipping using the platform. Alternatives such as eBay and even Amazon provide a much better buying experience within the app.

Alibaba and Tencent: China’s Mobile Payment Giants

Meanwhile in China, both Alibaba and Tencent — huge conglomerates that offer everything from ecommerce to entertainment — have been offering digital payments through their mobile apps for years. Alibaba has Alipay, Tencent Holdings has WeChat Pay. Combined, their apps allow users not just to pay for online goods, but even utilities, public transportation, tuition fees, traffic fines, and digital hongbao — those little red envelopes of cash given out to children during the lunar new year.

Other Players

There are many other examples of big tech setting foot in Fintech.

Since 2017, Amazon, in partnership with Chase, has offered its Amazon Prime Rewards Visa card to Amazon Prime members. It’s a credit card that gives 5% back on all Amazon.com purchases, naturally.

Then there is Uber’s Visa card, which gives users 5% back in Uber Cash (not actual cash) and is perfect for those who make constant use of Uber rides, or who order with Uber Eats.

Big Tech Won’t Turn Into Full Time Banks

Here’s the thing: big technology companies don’t necessarily want to become full banks. Brands like Apple and Google already generate more revenue as technology-led companies than they would ever generate as fullstack banking institutions. It wouldn’t make financial sense.

According to Sarah Kocianski, head of research at Fintech consultancy 11:FS: 

The headache of getting, and maintaining, a banking license would likely be considered too big a risk for these companies. Instead, they will continue to operate with licensed partners.

So instead of innovating new products from the ground up, big technology companies will continue to partner with more traditional firms to make use of existing services and infrastructure.

Big Tech Will Always Default to The Big Goal

Their biggest advantage is their existing infrastructure for the integrated delivery of services, whether those are financial or ecommerce, all part and parcel of a larger customer engagement strategy.

Despite their forays into Fintech, these big corporations have one model that makes sense for them: acquire users and continue to scale massively. Their bigger goal? To broaden their product offerings and provide users with even more reason to stay within their ecosystems.

Apple wants you to continue to buy Apple products. Google wants to be top of mind in yet another aspect of your daily life — your financials. And so on. It isn’t about making money on day-to-day transactions, fees, or lending money out (which is how banks make their money), it’s about keeping you inside Facebook or Google or Apple.

How Fintech Startups Can Tackle Big Tech

So how does this impact your Fintech startup? How will knowing this affect your marketing strategies or campaigns? And what tools can you employ to fortify your position?

Customer Centeredness is Your Superpower

If big tech decides to enter the niche your brand owns, you won’t be able to compete with them using the same tools or approach that they use. Their billion-dollar revenues can pay for better tools with more horsepower than your brand may be able to muster.

But refining and optimizing a truly customer-centric approach to your services is a step in the right direction. When you place the customer experience at the center of every product release, you build a robust product that can adapt to changing tastes and times, one that can weather any storm.

A recent survey asked what single factor affected the consumer’s decision to buy, and over half of them mentioned the overall enjoyment of the purchase experience.

Unlike larger companies who will take more time to get their ducks in a row, the nimbleness of a startup may be exactly what is needed to provide financial services post-COVID. Particularly to customers who are new to digital payments and online financial services.

Personalization is Your Secret Weapon

Impersonal chatbots won’t cut it. Neither will one-size-fits-all messaging templates. You need products and experiences tailored to each customer’s context — their previous in-app actions, their purchase history, their likes and dislikes.

This requires an approach to personalization that must be planned out and then automated if it’s going to scale with your own company’s growth.

  • Use automated segmentation to identify your most critical segments.
  • Use personalized product recommendations to send users offers that will resonate with their circumstances and their needs.
  • Empower your customer success team to delight your users at every turn. 59% of global consumers felt companies had lost touch with the human element of the customer experience, and 75% of customers preferred to interact with a human versus an automated machine. Even in our own software industry, we’ve seen great responses due to our individualized approach to customer success tickets and problem solving.

In the end, personalization efforts will pay off because if you treat your customers as people with unique needs, they will keep coming back for the royal treatment they get in your app. After all, 84% of customers say that being treated like a person, not a number, is important to winning their business.

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