Google and Facebook Could Challenge Traditional Banks

Bank of Google? Facebook turning into Facebank?

It sounds wild to think these companies could become major players in the financial services industry, but partnerships abroad are serving as a model.

Chinese customers of Alipay, a wing of e-commerce king Alibaba, are pouring money into Yu'e Bao, an online investment fund, and getting high rates of return of around 5% annually. They can also use the service to pay for things online.

It continues a trend we're seeing of a powerful online company with a wide reach (Alibaba) partnering with a traditional financial company (Yu'e Bao) and offering products in a fresh way for the Internet generation.

In the video below, Motley Fool banking analysts Matt Koppenheffer and contributor David Hanson talk about whether this is a direction Apple and Google could take to go further into the financial realm. But they also wonder how much the Internet still change the banking industry.

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