Watch out, banks! The financial markets are expanding with the entrance of new competitors!
Back in 2012, Wal-mart was foiled by bank lobbyists and struggled with obtaining a bank charter. Instead, Wal-mart settled for check cashing and pre-paid American Express cards called Bluebird.
It seems banking for the unbanked is becoming popular among Internet and technology giants. The Washington Post recently published an article about a survey that Accenture conducted. Accenture’s survey determined that people are willing to sign up for tech companies like Google, T-Mobile, PayPal, and Apple for banking services. While this survey was predominantly geared towards young people, the numbers are very favorable towards these tech companies.
The author of the Washington Post article, Danielle Douglas, explains:
“These companies possess a few things that could really pose a threat to banks: an existing customer base, scale and an ability to quickly adopt new technology.
Take T-mobile, which has 49.1 million wireless customers, an established base for the telecom to pitch its prepaid debit card. Many of these folks use T-Mobile’s prepaid wireless phones (15.5 million) for the same reasons that make prepaid cards attractive: There’s no credit check and no long-term contract. And with more people using their mobile phones to transfer money or take pictures of their checks for deposit, having the same provider manage most of the steps in that process could be appealing.”
Read more about this here.
The next big questions are: how would these banks for the unbanked be regulated? What do these potentially new tech companies mimicking financial institutions have in store for regulators? Can regulators adapt fast enough to address this new twist on the financial market?