Wired - November 16, 2019
In the early 2000s, Walmart tried to start a bank. It was a well-trodden path; even rivals like Target had done it. And yet hackles were swiftly raised. States passed laws to ban would-be Walmart branches. Talks with regulators languished. Members of Congress drafted a bill that would ban retailers from banking. It was a matter of both scale and trust: whether the nation’s retail conqueror should be allowed to roll into yet another industry, and potentially dominate it. In the end, after nearly a decade of trying, Walmart bailed on the attempt.
“We don’t plan to do this again,” Jane Thompson, Walmart’s president for financial services, told the New York Times at the time. “The bank is behind us. We will use our partners to roll out new products.”
As big tech companies dive deeper into banking, it’s a cautionary tale—and also a playbook.
On Wednesday, Google confirmed reports that it would begin offering checking accounts next year, the latest in a recent volley of tech ventures targeting consumer finance. Uber, under the moniker Uber Money, wants to be a bank for its drivers (and maybe riders, too). Apple has an indestructible credit slab. Facebook (sorry, FACEBOOK) just announced Facebook Pay—Venmo basically, except Facebook gets all the transaction data for ads. (Not to mention Libra, its attempt to build a global cryptocurrency payments network.) Amazon, like Google, has reportedly explored checking accounts of its own.
Which makes sense. The inexorable gears of profit appear to be slowing for US tech. Facebook warned investors last month of coming “headwinds” in digital ad targeting. iPhone photos can only get so much crisper, Amazon’s shipping that much faster.
The US tech firms need only look to Asia for a lesson in how a push into banking can accelerate their growth. There, tech firms plowed into finance years ago and largely won out. In Beijing, it’s embarrassing to pull out a credit card rather than a QR code that links to your WeChat account. Ant Financial, the banking arm of Alibaba, is far bigger than Goldman Sachs, the bank that helps Apple issue its credit cards. On the same apps you use for news and games and texting, you can also get loans, credit, and manage your investments.
"All of these players have quite bold ambitions to be the center of everyone’s life."
Gerard du Toit, Bain
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