Cape Town, 31 Aug 2012
Mega firms Apple, Facebook and Google will struggle to be the bank of the future, because they cover too many geographies and do not have a physical presence, says Gartner.
Speaking at the Gartner Symposium, in Cape Town, research VP Alistair Newton said if companies want to be banks, they need to focus on the fundamentals, such as lending and taking deposits. He said circumstances are changing and, moving forward, the fundamentals will be changed by customer influences.
According to Newton, mega digital firms like Google, Apple and Facebook lack physicality such as a branch network, which some people may require, and customers do not move banks readily. However, the mega firms will have a key role to play as banking changes, as more bandwidth becomes available and people are increasingly socially connected.
Apple, Facebook and Google do many things well, such as managing data, noted Newton. He added that the companies define agility, and identify and act on customers' needs.
The companies also focus on the customer experience and extend the value chain beyond the core. They also have flexible and variable business models, while banks have standard models.
However, banking is not as easy as it looks, as layers of customer-facing security are required, which is not a core function of the mega companies, commented Newton. It is also complex to provide an integrated set of financial services products.
Newton added that banking availability is key, while it is not the end of the world if Facebook goes down. Regulatory environments could push these firms away from even trying to enter the space, and different rules will apply to each geography in which they have a presence.
Apple, Facebook and Google should play to their strengths as there are better places to make money, and “banking is boring”, he concluded.
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