Traditional lenders react to mobile wallet gains made by Apple and Google as tech groups push harder into financial services
America’s largest banks are preparing to fire the latest salvo in their efforts to defend their turf from Big Tech groups.
“Regulators want banks to know who their customers are, and that becomes a lot harder when you are working through a fintech,” says Michele Alt, a bank consultant and a former top official at the Office of the Comptroller of the Currency. “Anecdotally, we have heard increased examination scrutiny by regulators of these partnerships.”
More recently, JPMorgan has struck deals with Amazon and Apple that will help the two tech companies expand the banking services they are able to offer their customers. Citi also has a deal to provide some of the financing for Amazon’s instalment payment offering. “We see a lot of banks that want to partner,” says Jakob Pethick, chief commercial officer of London-based fintech YouLend. “It tends to be the midsized European banks for us, but a growing number of large banks are getting more interested in outsourcing their origination to us and other fintechs.”
The iPhone maker does not release official statistics on use of its mobile wallet, saying only that 90 per cent of US retailers now accept the payment app. According to market researchers, Apple Pay accounts for just 6 per cent of global purchases. But the number of Apple Pay users has climbed rapidly, from 60mn five years ago to more than 500mn now. Industry watchers say this has made banks nervous. “It’s a $40tn experience,” says Michael Abbott, global head of banking at Accenture.
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