Facebook and Apple Will Fail if They Launch This Product

Much has been made about the possibility of Apple, Google, and Facebook tackling the banking world, but it turns out the challenges they face are greater than anyone may believe.

Jun 29, 2014 at 12:00PM

Many have speculated Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB), and Google (NASDAQ:GOOG) could take down the biggest banks if they moved into the financial landscape. But one recent survey revealed the technology firms would face a long and difficult battle if they ever made such a bold move.

The bright belief
All signs are pointing to the three technology titans entering the payments landscape. Google already has a position through Google Wallet. Facebook is reportedly preparing to obtain regulatory approval in Ireland, which would allow it to issue digital credits that can be turned into cash. And Tim Cook of Apple said plainly in January, "[T]he mobile payments area in general is one that we've been intrigued with, and that was one of the thoughts behind Touch ID."

Aapl

Knowing the likely movement of the companies into the payment sphere, the next supposed step would be into the actual banking industry.

After all, more than two years ago popular technology website Gigaom ran a story titled, "What is the next industry Apple can disrupt? Banking!" And in 2011 Businessweek ran "Facebook, Your Future Bank." And of course Google has its Wallet functionality, which in some ways allows it to mirror a bank.

With all that in mind, it's easy to think the banking industry is poised for disruption. But the three firms may face a tougher battle than anyone would like you to think.

The troubling truth
In a recent survey, consultancy Accenture found just 27% of individuals in North America would consider banking with an institution that didn't have branches. Of course, Google, Apple, and Facebook could build their own branches if they wanted to, but that would likely fly in the face of the Silicon Valley lure they offer. And that was just the beginning of bad news. 

Images

Source: Accenture.

In addition, as shown in the chart to the right, consumers across the globe simply trust banks more with their personal data than everywhere else. While Google ranked higher than Apple and Facebook, the reality is, just 23% of people trusted it relative to the 41% posted by banks.

While this shows the hesitations people have when it comes to their data, the reality is, privacy concerns would be a major limiting factor for those firms in the technology industry.

Although 29% of individuals in North America said they would consider banking with Google or Apple if they offered the service, the reality is switching banks isn't something people do often. In fact, just 12% of people in mature markets had "switched to another bank for their primary account or other products within the past year."

And while banks face challenges in the future the study noted:

[B]anks also possess inherent competitive advantages in the digital world. They have large and relatively "sticky" customer bases; vast amounts of customer and transaction data; and valuable know-how in the field of payments, security, compliance, and financing -- all of which are difficult to replicate.

The thought of Google, Apple, or Facebook expanding into the banking world may seem to present an appealing and massive opportunity for both consumers and shareholders. But the reality is more and more signs reveal the such moves would likely be more difficult and costly than any of us first thought.

Banks + Apple? This device makes it possible.
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its destined to change everything from banking to health care. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here

Patrick Morris owns shares of Apple, Bank of America, and Google (C shares). The Motley Fool recommends Apple, Bank of America, Facebook, and Google (C shares). The Motley Fool owns shares of Apple, Bank of America, Facebook, and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers