(YAHOO! Finance) – As Apple Inc (NASDAQ: AAPL) and Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL)-owned Google penetrated into financial service and realized significant gains with mobile wallets, America’s biggest banks have joined their efforts to defend their turf. Namely, JPMorgan Chase & Co. (NYSE: JPM), Bank of America Corporation (NYSE: BAC), and Wells Fargo & Company (NYSE: WFC), among others, will be launching a mobile wallet that will connect to credit and debit card accounts of 150 million customers.
Fintech Partnerships Have Been In The Air For A While Now…
Fintech has been taking a bite out of traditional banking. In April, Apple continued its iBanking revolution that began with Apple Pay by joining forces with The Goldman Sachs Group Inc (NYSE: GS) to release its Apple Card high-yield savings account. Goldman Sachs is known for embracing technological development to meet the needs of its tech-savvy customers. But, even other offline banks entered the fintech game.
For example, JPMorgan has struck deals with both Apple and Amazon.com Inc (NASDAQ: AMZN) that will fuel the two tech titans to expand their banking footprints. Amazon also got the help of Citigroup Inc (NYSE: C) with its installment payment offering.
Big Banks’ Mobile Wallet
Named Paze, the banks’ soon to be launched digital wallet will be operated by Early Warning Services. This bank consortium group already runs the payments app Zelle which became the largest peer-to-peer payment app pretty quickly since its launch in 2017 so no wonder that big banks are hoping that the same formula will help replicate this success. Last year, payments over Zelle increased almost 30% to $629 billion while PayPal Holdings Inc (NASDAQ: PYPL)-owned Venmo’s score was only $244 million and PayPal acquired Venmo back in 2013, four years after its inception. Even PayPal got pressured by Apple’s entry into digital payments and is undergoing a business turnaround. Venmo has long been seen as the source of long-term growth for PayPal but it still didn’t get to a point of becoming a significant revenue contributor. Despite the digital payments platform’s pioneering journey, PayPal management’s guided for lackluster gross profit growth.
Fintech Partnerships Are Here To Stay
Paze shows that rivaling banks are willing to work together and to use the expertise of tech firm to stop Apple, Google and most recently, X, whose goal is to offer banking services. Although Financial Times quoted a market research study that merely 6% of global purchases was made by Apple Pay, the number of users skyrocketed in five years, going from 60 million to now exceeding 500 million and that is making banks nervous.
Yet, fintech partnership are not favored by regulators whose concern is that such unions expose the U.S. banking system to non-trustworthy players.
Putting The Genie Back In The Bottle Is An Unlikely Scenario
Big Tech is certainly giving Big Banks a run for their money as Apple, Amazon and Google are poised to challenge the power that banks have enjoyed for a very long time and the mobile wallet is now the biggest battleground in this tussle. Many believe that banks are not able to put the Apple, Amazon and Google genie back in the bottle as the history of the industry is filled with advancements that ultimately became industry standards.
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