Mature tech companies have the means, motive, and opportunity to turn into banks. They have cash and can reasonably expect more if it; they have data and can put it to use, and they can smooth out their customers’ spending to smooth their revenue growth.
Alphabet, Google’s parent company, is extending this model and becoming a financial supermarket instead. They’ve launched an insurance company under their Verily business,
which helps self-insuring companies protect against catastrophic losses. Basically, this means that Employers that pay for employee health claims out of pocket pay for a form of dynamic hedging. If they hit a predetermined point of money they pay for their employees’ health, Verily pays the rest.
Speaking of Big Tech: They already have quite a foothold in banking considering their cloud solutions. As we’ve written before, Microsoft Azure has long been the preferred cloud banking solution for the Fintech industry in Norway because of its regional data centers. Google Cloud hasn’t been that popular, but the reason might not be the location of their data-centers, but more about their deprecation policy.
Google is known for suddenly shutting down products (see the Google Graveyard
), but this also seems to apply to features in their cloud solution. I can see why risk-averse banks steer away.