The CB Insights team is out today with bunch of great data on Big Tech in banking. They go deep into everything Facebook, Apple, Google, and Amazon are doing right now to be your bank. And their plays include banking you personally as well as for your business, whether you’re a big org or a creator/influencer who’s just building a business. Great stuff as always. Here are some highlights, and link to full report below.
In 1Q21, fintech (a $28.2T market) had record deals, funding, exits, and mega-rounds. Eager to win the fintech boom, big tech companies have been taking a number of strategic steps to grow their market share in financial services. Here are 4 highlights from our latest report:
1. Big tech funding to fintech companies dropped slightly amid the pandemic as deal activity picked up. Big tech investment in fintech companies reached $2.2B in 2020, marking a 4% drop from the previous year. In contrast, deal count increased 52% year-over-year (YoY), hitting 32 deals.
2. Google remains the most active tech giant in fintech equity investments. Google led big tech in unique fintech investments (23) between 2020 and 2021 YTD, followed by Amazon (7). GV (Google Ventures) is the most active big tech venture arm by a wide margin, participating in 45 fintech funding rounds between 2016 to 2021 YTD.
3. Incumbent deals support big tech’s entry into financial services. Apple and Google are already partnering with banks to embed banking into their services, while Amazon is seeking out institutional lenders to expand its loan offerings. These partnerships present a win-win situation for tech giants and legacy names alike and help boost customer attraction and retention.
4. Big tech companies pose a growing threat to legacy banks. Financial services are becoming increasingly intertwined with non-banking apps (e.g., social media, communication), giving tech giants more incentive and leverage to keep their financial offerings in-house. Tech giants already have the capacity to not only offer improved banking services, but also scale quickly within their large user bases. In big tech’s race to become the go-to app for banking, shopping, and connecting, legacy banks face the continued threat of being further pushed out of the financial system.
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