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The AltFi view on the Big Tech takeover: No foregone conclusion

Yes, the technology giants are starting to play their fintech hands, but if history is a guide the future is still up for grabs.

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Weekly Leading Article

Last week Apple and Goldman Sachs re-animated themselves as fintech dance partners with plans for a Buy Now Pay Later tango. 

The rumoured partnership would see the former evolve its Apple Pay function to allow point of sale financing, presumably with capital and underwriting provided by the bank.

In short, it means taking on the likes of Klarna,Affirm and ClearPay. Coming just a month after Klarna itself saw a new round of funding that valued its business at $46bn, BNPL is clearly getting many people excited. 

The idea is that - for starters - it could disrupt the vast global credit card business. After that, with huge customer bases, and the network effects they create, the upside is near unlimited. At least that's what adherents say. Sceptics, meanwhile, question whether it carries the risk of putting people into debt and needs tighter regulation.

Affirm saw an immediate hit to its share price as reports of the plan circulated. Apple after all has an incredible global reach. Apple Pay has been strongly growing in recent years with c.500 million users, in 2020. 

So is this now ‘game over’ for the disruptors, as Big Tech and Goldman swoop in? In short, no. 

For at least five years the narrative of an inevitable Big Tech takeover of financial services and banking disruption has always been a simplistic one and proven repeatedly wrong.

Yes, large tech firms have incredibly powerful winds in their sales. Network effects, very deep pockets, millions of devoted customers and not forgetting the latest technology and access to superlative expertise. 

But, this is not their first endeavour. 

Apple and Goldman for example have already partnered on the Apple Card, which hasn’t even yet managed to make it out of the US market.

The launches of Google Pay and Apple Pay only served to help those challenger banks among the first to roll out support.

Amazon may be one of the largest payments processors in the world, but that hasn’t stopped Shopify, Adyen, and countless others from enjoying their slice of the eCommerce pie.

What makes anyone think this time will be any different?

The AltFi Leader is a new weekly view for 2021 from our editorial team. We’d love to hear your ideas, thoughts, feedback and constructive criticism:

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