Big tech companies have been a disruptive force in business since the internet became mainstream. With the recently announced Apple Card, banks should be asking what the ambitions of companies like Apple, Google, Facebook, Microsoft and Amazon in financial services means for them.
Survey data suggests that many banks are already working with big tech companies to some degree, and such collaboration will likely grow deeper and more common over time. As big tech’s platforms consolidate more users and influence over the digital world, they will grow more attractive as partners, thanks to their reach and the cost savings they can enable.
Ignoring these tech behemoths may not be an option for much longer — if banks decline to partner with big tech, other new entrants may take those opportunities to pull business and customers away from traditional financial institutions.
After all, Marcus — Goldman Sachs’ consumer bank, which is partnering with Apple on the Apple Card — is a relatively new entrant to retail banking. The partnership could help Marcus rapidly expand its reach, and, more importantly, the amount of data it has about consumers’ spending habits that could help in targeting customers with more products and services.
But banks must take a strategic approach to collaborating with tech behemoths, and carefully weigh potential risks and rewards. The chief risk is that banks lose the relationship with the customer, and simply become an orchestration engine sitting in the background of big tech’s customer-facing offerings. Big tech will only want to take control of the customer experience in specific areas where they can add value, however, as Apple is doing by providing Apple Card users with tracking on their spending and rewards in the Apply Pay app. Uber and Amazon have similarly partnered with major credit card issuers to offer branded cards that enhance their customer experience with rewards points. Taking full control of the entire customer relationship would entail charging unpopular fees and penalties that would muddy big tech’s reputation for user friendly experiences.
Banks should consider where to leverage big tech companies’ existing platforms to boost their own customer experience. For Marcus, it makes sense to let Apple share information with customers through the mobile platform that Apple already owns and controls. As big tech’s mobile, artificial intelligence and cloud platforms grow more advanced and more central to everyday for many consumers, it will make more and more sense for banks to utilize those assets for customer experience improvements.
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