If you follow trends in fintech, you’ve probably heard that Uber is hiring employees with fintech expertise. At first glance, this news may seem surprising. Uber offers a ridesharing service. It’s not typically thought of as a financial services provider.
However, upon closer analysis, it’s easy to imagine the thinking of those making key decisions at Uber. The company has an edge over its closest competitor, Lyft, and it already offers Uber Cash, a digital wallet that offers discounts when users add money to it. By expanding further into financial services, Uber may be able to provide more attractive payment options that offer users additional discounts or other perks.
This story isn’t unique. Many other major companies have also recognized the potential of fintech and are making forays into the industry. Some of these companies include:
Not all companies that are launching fintech initiatives are targeting the consumer market. For instance, Microsoft is playing a more “behind the scenes role,” developing fintech tools for financial services providers.
Announced last December, the company’s partnership with ZestFinance will improve Microsoft’s ability to do so. Working with new fintech innovators, Microsoft is integrating ZestFinance’s artificial intelligence and machine learning tools with its own products, such as the Azure cloud platform.
This is a smart move. AI and machine learning can play useful roles in fintech services. For instance, in the case of Microsoft, the company specifically wants technology that can provide more transparency into AI decision-making, in order to appease financial regulators. For example, it’s not always clear how a machine learning model arrives at a decision, such as whether to approve one credit application over another. ZestFinance’s technology would add an element of “explainability” to Microsoft products to satisfy regulatory requirements.
It’s worth noting that Microsoft’s example demonstrates another point about fintech worth keeping in mind: partnering with a startup is often one of the most effective ways to join the industry fast. It’s particularly important that major decision-makers at traditional financial institutions remember this. Partnering with a startup may be the essential step they need to take in order to survive the fintech revolution.
Amazon is among the tech companies most actively involved in fintech. Although it offers a range of fintech products and services, in general, experts believe that it’s clear what Amazon’s eventual goal is: creating a new kind of bank for both consumers and merchants who already use Amazon’s other services. Amazon has made numerous acquisitions indicating this may be the case.
However, that’s not the only way in which Amazon is leveraging fintech. It’s also applying some of the same innovations used in its payment products to other areas.
For instance, Amazon has developed payment solutions for its merchants and customers, making it easier to make and process payments. The company has also worked with similar technology to allow shoppers at its brick-and-mortar stores to simply walk out with their purchases. Instead of giving money to a cashier, customers can connect the Amazon app to their bank accounts or credit card. The app will deduct the sum of what they purchased when they walk out of the store.
This highlights the fact that fintech products are often very popular because they add a greater degree of convenience to everyday tasks. They don’t always offer completely new services. Often, they simplify existing ones. That’s a key reason why the fintech revolution isn’t a fad, but an embodiment of consumer preferences. Customers choose fintech products over traditional alternatives because they make their lives easier.
Facebook is another example of a company that wouldn’t normally be considered a fintech brand. Few outside the industry would expect a social media platform to also provide financial services.
That said, to some degree, the company already does. Users can send and receive payments through Facebook Messenger.
What’s perhaps more interesting is the fact that Facebook recently announced plans to launch its own cryptocurrency called Libra. Those who’ve reviewed Facebook’s whitepaper on the subject point out that Facebook’s cryptocurrency would differ from bitcoin in certain key ways.
Accessibility is the primary difference. Bitcoin existed for years before the average consumer knew much about it. That’s not likely to be the case with Facebook’s cryptocurrency. Because the social media platform already has billions of users, it can easily bring its cryptocurrency to a large customer base right away. Additionally, because the sudden rise in the value of bitcoin resulted in substantial media coverage, experts believe cryptocurrency adoption will likely increase in the future. Consumers now understand the topic better and feel more confident using cryptocurrency than they previously did. Additionally, Facebook will provide assets to back Libra and keep it stable, which is also likely to boost confidence in its reliability. Finally, because Libra is a peer-to-peer currency and users won’t need a banking account or credit card to use it, it may be able to compete against the many other online payment options out there.
These are just a few examples of major companies expanding into the fintech sector. Going forward, expect to see more such stories as more business leaders recognize the opportunities in fintech and seek to take advantage of them.