The Competitive Threat from TechFins and BigTech in Financial Services

Abstract

The Chinese TechFins Ant Financial and Tencent's WePay are harnessing technology to redefine financial services and increase financial inclusion. TechFins purport to use technology to create a world where customers have access to financial services just like tap water – you open the tap and water just flows out. From being a minority view several years ago, the new consensus among bank insiders and industry commentators is that TechFins, not FinTechs, represent a greater threat over the next decade to financial incumbents. The other threat comes from a diverse collection of North American technology companies known collectively as “BigTech”. The main competitive strength of BigTech companies such as Amazon, Apple, Facebook and Google comes from massive datasets on customer transactions and behaviour in their platform ecosystems. This forthcoming chapter reviews the history and strategies of two companies that have moved farthest into financial services – Ant Financial and Amazon. It examines their key competitive strengths to gauge the threat they pose to financial incumbents over the coming decade.

Keywords: FinTech; TechFin; BigTech; Financial Services; Ant Financial; Amazon

JEL Classification: G20; L10; L80; O33