Houston... we have a Big Tech Problem

The prophecy is being fulfilled, and now it is Google that reacts. Google's CACHE (code-named) project will offer current accounts to its users in association with the most powerful financial group in the world, Citigroup.

As leaders in America in digital channels, at Infocorp we dedicate part of our time to understanding - the state of the art - of the technologies to bring innovative experiences to the customers of banking entities. We talk a lot with banks, understanding the business challenges, the particularities of each region, of each market niche, in order to develop strategies and digital roadmaps that allow institutions to position themselves as leaders in their market.

We have systematically carried this message to the industry, “we need to give our customers that extra mile, that “wow” experience that anchors a brand or a service in the user's memory”. Just as the first time we spoke to Siri or when Waze automatically suggested to us that we go to the gym as we do every Tuesday, these customer experiences are, in their unconscious, an indelible experience that generates great brand loyalty.

Why should banks take care of the experiences that Big Tech provides?

Basically because they are experts in putting the customer at the center of the experience, something that banks know is necessary, but few are able to do. No one knows customers better than Google, Facebook, Apple, or Amazon. So the arrival of these companies means customers no longer compares their bank with the bank of the competition, but with Google, raising the level of expectation. An App that works well and is able to make a transfer is no longer enough. Much more is needed for the "wow" effect we discussed.

The ability to know the customer like nobody else

Amazon has been lending money to SMEs for years, SMEs that sell almost 100% of their products through their platform. Amazon knows their working capital, how much they sell, what products they sell and their margins, harvests, bad and good months, it can even project the profitability of each company, who can be better positioned to lend money to that SME than Amazon? A bank may take months to collect that information, when the SME in Amazon can take out the loan in minutes 100% online and maybe even with better interest rates.

When Apple launches Apple Card it offers a 100% online onboarding process and an incredible user experience. Apple adds meta data to transactions and the customer can see where they made the purchase, in what location, the store's logo on their statement, what the exact GPS position was at the time of purchase. Again, Apple is using its near monopoly on phone operating systems. The client's main device is managed precisely by the two big Big Tech. Google and Apple have the customer's heart in their hands, so the ability to offer differential services is almost unfair competition. When a customer pays with Apple Card, Apple knows where that customer is carrying out the transaction by consulting the operating system, its geographical position, technically it could even know the pulse of its customer at the time of making a purchase if it had an Apple watch and had a map of which purchases the customer finds most exciting, to segment their offer with surgical precision when communicating.

What can we expect from Google and its financial services?

Current accounts will be offered in 2020 and will complement the Google Pay payment service. The roadmap includes incorporating consumer loans and micro-investment services. Google these days is again facing lawsuits, in this case, for access to information on users' medical data. Again, at what rates or with what compulsory insurance would you lend money to a person with high cholesterol levels, sedentary, who smokes, of an age with a probability of cardiovascular events, who drives an hour and a half to work every day . All information accessible to Google if the client has an Android. More than 75% of smartphone users have one. The data and the analytical power together with the artificial intelligence of its tools will be the perfect combination that Google has to offer its users, to pursue the “wow” effect, understanding consumption patterns, and perhaps becoming a personalized financial advisor.

Is the battle lost?

Far from being lost, banks that understand the game have more opportunities than threats in Big Tech. One thing seems clear, none of the tech giants wants to have a bank. Economically it is obvious that they could do it, however in all the examples that we are seeing there are alliances with banks because, again, it seems that the central thing continues to be the customer. The Big Tech know that financial services are part of people's lives and this is what they seek, to join banks with the customer in mind. Of course, nobody does this without wanting to get a fee in return, because it is clear that the Big Tech do not want to be banks.

The opportunity that open bank opens up for medium and small banks

We have no doubt that banks should open up to the world, connect, complement their offer with third parties, create ecosystems around their financial services and why not join the Big Tech to play on the same team. As in everything new there are risks, you have to get advice, understand the market, know the integration platforms, the standards, but this is the game that you have to play today. The sooner banks start, the better they will be positioned.

You have to start with something, and speaking is the best way.

At Infocorp we are passionate about the subject, let's talk.

We invite you to see this presentation: Open Bank: the next step in the customer experience.