big tech and banks

Banks vs. Big Tech: fighting the great white in the shark tank

João Simões de Abreu, June 25, 2021

In the last decade, banks have focused most of their attention on their emerging competitors from fintech – companies who are tech native and use their digital ingeniousness to surpass their competition in the banking and financial sectors. However, they might have overlooked the largest sharks in the tank – the big tech companies, namely Amazon, Apple, Facebook, and Google.

According to CB Insights, in 2020 alone, the four giants invested 2.2 billion dollars in fintech companies across 32 deals, a 52% increase compared to 2019.

Opportunity or Threat?

Big tech is increasingly tapping into the space. Google and Apple already partnered with banks to embed banking into their services. The e-commerce giant Amazon is connecting with institutional lenders to expand its loan offerings.

Such relationships can be seen as fruitful to established organizations since they upsurge customer attraction and retention. Still, this is most likely a transition period. One where tech giants are gradually exploring the market to see where their services fit best. In Beyond Fintech: A Pragmatic Assessment of Disruptive Potential in Financial Services report by the World Economic Forum, the analysts predict tech giants are just biding their time before joining the financial services industry.

At the moment, one of big tech’s most important pursuits is to become their customer’s ideal place for shopping through digital channels, connecting with peers, and (more recently) accessing banking services easily. In the latter’s case, money management is becoming more and more tangled with non-banking apps, such as communication and social media apps. That alone gives Big Tech the motivation and encouragement to diverge from legacy banks and keep their offerings in-house.

Ultimately, as soon as the giants understand what markets they could tap into and how to drive the expansion in the financial and banking space, a partnership with incumbent banks will not offer any benefit. By that time, they will have the technology, the knowledge, and (already have the) financial means to swallow their former partners and new competitors.

Behind the fintech rise of Big Tech

Facebook, Amazon, Apple, and Google have all the means necessary to be unstoppable forces in the industry. According to CB Insights analysts, there are four main drivers for Big Tech’s activity in the space:

Embedded financial services: Application Programming Interfaces (APIs) make it increasingly easy to embed banking services into any product. Consequently, companies from all industries are adding new revenue lines from financial services.

Scaling opportunity: Due to their proximity to the public and the reach with their sheer quantity of active users, embedding banking services in their existing products can easily boost the adoption of their offering in the financial space.

Data: Tech giants are not only sitting on massive amounts of user data, but they also have the mechanisms to analyze the information and create customized financial products.

Investing: In the first quarter of 2021, fintech companies raised 22.8 billion dollars. Investing in this space can not only be a way of getting a better inside look at the financial industry but also to eventually exit the companies and bring more financial results to their corporate venture capital funds.

What can Legacy Banks do to stay competitive?

As Watts S. Humphrey, the father of quality in software, said two decades ago, “every business is a software business”. Today, banks are software companies disguised as financial institutions. The software empowers better decision-making, eases processes, enables customer’s use of their services 24/7, among many other benefits.

This brings us to a question: what can banks do to stay competitive when software is the most critical asset, and the tech giants are getting in the space?

According to Anna Muzaslka, Quidgest’s Fintech Solutions Manager, banks must:

  Create better customer relationships and experiences;
  Introduce new products swiftly;
  Use the data they have on existing and prospect clients to release tailor-made products;
  Empower banking experts with the technical know-how. 

To make this all possible, banks need to shift to intelligent composable businesses – an approach that makes it possible to create an organization from interchangeable building blocks. Composable businesses are a natural acceleration of the digital business that we live in every day. It allows the delivery of resilience and agility that the current times demand.

Contact us to learn more about this new reality and how we can help your bank stay competitive.


Quidgest is a global technology company headquartered in Lisbon and a pioneer in intelligent software modeling and generation. Through its unique generative AI platform, Genio, develops complex, urgent, and specific systems, ready to evolve continuously, flexible, and scalable for various technologies and platforms. Partners and large organizations such as governments, multinational companies, and global multilateral institutions use Quidgest’s solutions to achieve their digital strategies.

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