[fauigerzigerk]

>They're scared because these apps have successfully vertically integrated to become banks.

I'm not sure tech companies really want the core banking business, which is to lend money (taking on credit risk in the process) funded by deposits.

I can imagine Amazon doing it for smaller consumer purchases as they know their customers well. But who will make loans to SMEs and larger retail loans? Google and Apple? I doubt it.

Eventually interest rates will rise and then bad loans will increase, and tech companies will start to wonder if that's really the business they want to be in (like GE has been "wondering" for many years now).

And then there's the regulatory aspect. Do tech companies really want to be regulated as banks? I get the impression that they have daily run-ins with all sorts of regulators already and they're running scared.

[zodiac]

I wonder if the roles of "payment network operator" and "credit provider" need to be as entwined as they are now

[fauigerzigerk]

That's a good point. I think they are not nearly as entwined as they used to be (before Paypal) and that trend is going to continue.

[forkLding]

Its still a doable business though, presumably its what Paypal and any payment processor wants to be, because getting paid mainly to do transactions is still not the biggest money earner and customers will appreciate a wholly integrated process instead of one fraught with different vendors and regulations.

Also presumably Alibaba and Tencent are earning quite a bit off their payments/banking and customers love it because they dont have to carry cash and do all the other steps etc. (talked to Chinese people about it).

[westiseast]

Also, aside from traditional lending, Alipay and Wechat are both competing to basically own all social and consumption data - in a sense I’d agree they don’t want to become traditional banks: they want to create closed payment/purchasing/social systems where they can take cuts from every step of the process.

[charleslmunger]

It's not really the core banking business in the US - interest is only about 50% of income for large banks.

http://money.cnn.com/2017/02/22/investing/atm-overdraft-fees...

And check out page 38 of BoA's annual report: http://media.corporate-ir.net/media_files/IROL/71/71595/BOAM...

Interest income was $44.7 billion, non interest income (aka fees, trading, and services) was 42.6 billion.

[fauigerzigerk]

Lending is still the biggest segment by far and some of the fees and charges are closely related to the lending business.

Also, most of the other segments are not exactly what I imagine tech companies will want to do either. In the case of BoA that includes the entire business of the former Merrill Lynch.

[westiseast]

FYI Alibaba/Alipay has a range of loan and financial products. My wife’s Taobao business does well, and so she’s eligible for huge, insane loans on Alipay. On the other side, micro-loans to fund consumer purchases are also available.