Will Big Techs Replace Traditional Banking?

  • Sabrina Akramova, Managing Editor at Financial IT

  • 19.05.2022 09:45 am
  • bigtech banking payments

In the previous decade, a popular narrative has emerged warning of the significant threats that fintech firms like RevolutMonzoStarling and Atom Bank pose to the traditional banking and financial services sector. However, traditional banks are more likely to be replaced by Big Tech (Google, Apple, Amazon, and Meta) than by challenger banks. Indeed, Big Tech can present a rich banking experience as they already have pre-established massive user bases. And from now on, the whole financial sector is getting closer to an unavoidable dilemma - whether to ignore the Big Tech threat or to partner with it.

Big Techs’ initial attempts to compete with traditional banks

Apple collaborated with AmexMasterCard and Visa in 2013 with an aim to replace personal data transfers with single-use digital tokens. Later in 2019, Apple and Goldman Sachs introduced a credit card in the United States. During the COVID-19 pandemic, the use of the underlying mechanism, Apple Pay, grew at an extraordinary rate. With its devoted, high-net-worth user base and the desire to diversify its revenue streams, Apple is destined to expand its presence around the globe. 

Amazon, meanwhile, entered the race stealthily with Amazon One, its palm-print-based payment system. The solution enables clients to link their payment cards to their palm prints, thereby transforming authentication into identity and streamlining the payment process. Currently, it is only accessible at some of Amazon's stores in the US, but a rollout is anticipated to result in wider adoption.

After numerous attempts to take a leading position in the fintech market, Google relaunched its Google Pay app in November 2020. Just Like Apple Pay, it lets merchants accept mobile payments for goods and services (accepts both e-money and credit cards). Google Pay's modifications are bold. If users activate all of its capabilities (and trust Google to keep private data safe), they will have access to a wealth of well-integrated tools for tracking spending and saving.

Why do Big Techs have a competitive advantage?

Obviously, Big Tech has several advantages. Conglomerates are working on creating a so-called cashless society, which would allow users to send money by smartphone without leaving a messaging app or logging into a bank account. As long as Big Techs are driving and facilitating these developments, they are more likely to benefit than traditional financial organizations, whose direct role is diminished. 

Secondly, user experience is playing a central role in every aspect of life. With the help of real-time data, Big Techs collect, analyse insights and tailor personalized recommendations, which is not common for traditional banks. Of course, traditional banking is refocusing on AI and machine intelligence to improve client experience. But to adapt rapidly to consumer trends, Big Tech has a huge lead in terms of developing and exploiting its vast troves of data. 

Moreover, Big Tech firms generally recruit the best IT specialists, leaving traditional banks trying to catch up. Although Big Tech companies were born adaptable, the competition will grow in the upcoming years. Without internal culture changes, banks may never recover. 

Regulators are fueling Big Techs’ power

As we know, regulators in the UK are setting up new "strong customer authentication" (SCA) requirements, which will also favor Big Techs over traditional banks. Together with open banking updates, regulations will allow Big Tech to redesign customers’ payment methods. Internet companies and merchants would easily adopt SCA-compliant Apple Pay and Google Pay, rather than drawing longer payment routes with traditional banks serving as a mediator (which is outdated). 

A payments war might become existential for banks. Big Tech businesses have global client bases and don't need banks' infrastructure or money, eroding the banks' competitive edge over smaller fintechs. As people prefer tech-enabled smart payments for goods, services, and cash transfers, the necessity for banks' centralised pots will decrease. Amazon and Google have financial reserves to match them. 

Traditional bank brands should be worried about these tech companies' moves. Poor customer reputation, antiquated hardware, and pricey branches and employees weigh them down. But they're still needed. Their enterprises can alter. Better customer interactions are crucial. If they want to compete with the tech giants, they must improve customer experience, deepen relationships, and cut expenses. These aspects are crucial if banking's future is virtual.


The traditional banks should be worried indeed about Big Techs' moves. Poor customer reputation, antiquated hardware, and pricey branches weigh them down. But they're still needed. Better customer interactions, adaptability, and flexibility are crucial. If they want to compete with the tech giants, they should improve customer experience, deepen relationships, and cut expenses. 

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