Recently, Bloomberg has reported that Google has obtained an eMoney license in Lithuania. Without any "ifs" and "but"s this reinforces Google's willingness to be a player in the Financial Services industry.
As one who has spent the last 10 years telling banks' boards that they need to be so afraid of extinction, that they ought to disrupt the way they see the consumer and technology themselves, before other players find a way to the hearts and minds of their consumers and offer them Financial Services in their place, let me tell you what immediate reactions this news has elicited in boardrooms everywhere.
None.
Ranging from mere complacency to firm paralysis, the industry is in deep denial regarding the threat of any new players taking their spot and seeing them have the same fate as the music, the photography or even the physical toys retail business.
Here are some of the things they tell themselves to feel better ranging from white lies to misinformed opinions:
"But it's only e-money"
While they have been largely simplified to attract competition in the UK and elsewhere in Europe, the process to acquire an e-money license and that of acquiring a full banking license, are still complex with the former being even more laborious for good reason. It is therefore very likely that GAFA has obtained eMoney licenses en masse first because it's easier, convenient, and it fits their initial propositions.
Thinking of the bank as a provider of products makes it seem as an illustriously big deal that the e-money providers can't offer loans or interest on balances but in effect, when you think of the endless possibilities of contextual MoneyMoments, it is only payments and transfers that offer them and those are firmly possible without a full banking license.
"But they already had one"
Someone pointed out as a response to my Tweet that Google was already e-money licensed in the UK and this is likely just a Brexit-panic response. I haven't been able to corroborate that info but even if it were so what is it proving? That banks ought to have panic-ed about it earlier? Better late than never!
"But it's only in Europe"
This particular piece of excuse is reserved for the non-European bankers. Seeing how Google Pay (formerly Pay-Send, formerly Wallet) has been around in the US for 7 years and how Google has made a play for the Indian market earlier this year with Tez (now Google Pay) which has gone largely under everyone's radar, there's little reason for geographical sighs of relief.
"But it just doesn't matter, it doesn't do... X, it's not really a play for Financial Services"
Doesn't it? Isn't it? Have you taken a close look at the free and intuitive mechanism they offer for transfers? Have you spent any time analyzing the way they integrate with Android Pay? What about the ecosystem of loyalty and its future integration with search-and-buy? How about the peer-to-peer bill splitting functionality your bank has been trying to offer as a feature in the mobile app since early 2009?
"But that's not their core business"
This one is the most thrown-around phrase of soothing consolation when it comes to discussing any big technology giant entering the financial services arena. That just seems to be firmly outside of the realm of possibility that they would be interested in anything other than search, Prime delivery or spying on our private conversation but it's a healthy exercise to at times recall that the "core business" purpose of any of these companies, is, as it is for the banks themselves - turning a profit.
"But everyone else has one"
True, Google is the last of the big giants in GAFA to get its eMoney licenses in place but that should be a lot more terrifying than it is reassuring!
"But Google messed up many other products already"
This one is the only objection I can stand behind and should there be as equally astute ones to discount Facebook or Amazon then we should maybe all rest easy. Google does indeed have a firm track record of throwing experimentation at the market and having no fear to pull it back if necessary.
Some would claim it's intentional and part of their Agile DNA, others would claim it's a sign not all is rosy in Silicon Valley but between Glass, Wave and now Plus, Google has indeed been recalling product lines so there's no reason why they shouldn't pull out of the money business as well. With that said, a license simply gives them an option and the way they exercise it will be interesting to watch.
"But nobody trusts them"
Bankers absolutely loved the Facebook privacy issues and every other manner of GAFA misfortune as to them, it was further fodder in support of why they should remain calm and carry on banking like it's 2005. According to adages dating to the great customer satisfaction annals of 1999, the main asset a bank has is the trust of the consumer and this perceived holy grail can and will only be held by an incumbent bank.
Customers would have to make a conscious decision to trust another player more be it a challenger or GAFA to switch and let them satisfy their money needs, you see and there is no way that will happen.
What a rude awakening awaits these advocates of the imaginary trust fund. As I have said time and again, GAFA won't kick the door open and step into the limelight flipping their cape and announcing their arrival in the banking space in time for banks to run to the panic room and deploy untold magical experiences for the consumer they have prepared for this doomsday scenario in particular but will instead insidiously insert themselves into our lives making us happier and better off and we before we know it we would have started banking with them and long forgotten what incumbent held our purse strings not long ago.
"Who should be afraid of the big bad wolf?"
Everyone! It isn't only banks that ought to take this seriously enough that they stop doing business as usual and start paying intent and actionable attention with real innovation mandates but every other player including the large and mid-sized money transfer players and even the challenger banks as the GAFA entries will be insidious and powerful customer wise and there will be a lot of Kodak -like corpses left in the wake of their entries.
