The question is not a crazy one: GAFA are investing in banking services, as well as a lot of FinTechs: Apple started in the payment business in 2014 and has just joined forces with Goldman Sachs to offer a credit card. Facebook allows payment on its messaging and it should launch a cryptocurrency this summer. Amazon is looking closely at the sector and Google is looking to expand its payment service, Google Pay. At the same time, a multitude of FinTechs around the world offer the opening of bank accounts with reduced operating costs.
The technique is always the same: start with payment, including in partnership with the banks, which thus suspect nothing, and then strengthen the contact with the customer, offer them other services, and finally take its autonomy from banks, which will leave them hanging. Apple is a perfect example of this strategy.
Facebook is even considering launching its own cryptocurrency this summer, the Facebook Coin. Nothing official for the moment, but the top management's confessions indicate that the project is moving forward. Transnational transfers would be affordable for everyone and very cheap, while current providers require comfortable fees. In addition, not only banks but also Visa and Mastercard would be sidelined with the Facebook Coin.
Of course, these new players only represent a few percent of the market share today, but we must look at the situation at the global level and in terms of dynamics. Almost half of the world's population does not use banks and these technological players are in the best position to meet this need (a smartphone + an app, and here is a bank account). The growth prospects of traditional banks are seriously affected. On the other hand, in developed countries, the younger generations do not have the fears of their elders for dematerialized banking services; on the contrary, they are immersed in them.
And above all, we can foresee that a question will become crucial in the coming years, given the forecasts of a growing number of economists for a future financial crisis, where would you prefer to deposit your cash? In a bank with a balance sheet full of debt, or at Apple, which has a $200 billion cash cushion? People will realize that depositing their savings at Deutsche Bank, for example, is a senseless risk-taking. And what can traditional banks offer to keep their customers? Investments? They no longer bring in anything because of the zero percent rates! Real estate credit, that's all, and it will certainly end up being "uberized" one day or another.
Savers will learn to become resilient in the face of the financial and banking crises that are sure to arise as public and private debt swells all over the world: cash in an institution capable of resisting crises (and therefore not a bank), real estate, a little cryptocurrency, and physical gold to protect against banking and currency risks. The latest in technology and the most ancient money, here is the right formula!
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Philippe Herlin Finance Researcher / Doctor in Economics
Philippe Herlin is a researcher in finance and a doctor in economics of the Conservatoire National des Arts et Métiers in Paris. A proponent of extreme-risk thinkers like Benoît Mandelbrot and Nassim Taleb, and of the Austrian School of Economics, he will be bringing his own views on the actual crisis, the Eurozone, the public debts and the banking system. Having written a book on gold that has become a reference (L’or, un placement d’avenir, Eyrolles 2012), he wishes to see gold play a growing role in our economies, all the way to its full re-monetization.