By Tina Giorgio
Last month Google unveiled its new Google Pay app—complete with a DDA-like account attached. Heralded as a “smart bank account” in a mobile-first environment, this new feature, called Plex, stems from the tech giant’s partnership with 11 financial institutions nationwide.
This latest effort by Google is part of a trend of non-bank tech companies wading into payments territory. (see sidebar)
But, in most cases, these players aren’t interested in payments from a financial services business standpoint. It’s all about the data. Experts valued the global big data technology market at $41.33 billion in 2019, with nearly 45 percent of that market stemming from North American activity. Projections take the market to $116.07 billion by 2027, fueled in large part by the growing use of artificial intelligence, machine learning, and data analytics.
As the fight for data dominance with big tech wages on, bank accounts and payments are unfortunately being eyed as a cave of riches, becoming a prime target for anyone seeking more insights into consumer and business behaviors.
While some see data as the treasure trove, community banks will continue to have a strategic advantage in the marketplace. It all comes down to having the high-tech, high touch services that consumers demand. Because they are America’s most trusted lenders and have a longstanding reputation as stewards of their customers’ financial data, community banks will need to leverage that position and to strengthen their customer relationships. Specifically, community banks should:
While community banks still have a leg up on the competition, the window of opportunity is becoming smaller due to increased competition. This BigTech trend will advance and accelerate, so community banks need to factor it into their near-term plans or risk being disintermediated in the long-term. The BigTech threat is real, but community banks are in the power play position; to remain at the forefront of their customer’s financial lives, community banks must continue to leverage that position of strength.
Tina Giorgio is ICBA Bancard president and CEO.