We recently learned that Alphabet‘s (NASDAQ:GOOG)(NASDAQ:GOOGL) Google has decided to scrap its plans to offer bank accounts of its own. Instead, the tech giant wants to focus on products and services that help existing banks serve their customers better. In this Fool Live video clip, recorded on Oct. 4, Fool.com contributor Matt Frankel, CFP, and Industry Focus host Jason Moser discuss why this could lead to some mergers and acquisitions (M&A) in the fintech space.
Jason Moser: Do you feel like, given it’s not that Google saying they don’t want to be a part of this, but they seem to be focused on maybe coming at it from a different direction now, and like you said, enabling financial services, enabling the banks to do more. Now, that admittedly is a little bit more behind the scenes. But even still, given where things stand today, the quick development we’ve seen in the fintech space, some of the consolidation that we’re seeing, it feels like to me, this perhaps results in Google or Alphabet making some acquisitions in order to build up this presence. Do you feel like that’s a possibility?
Matt Frankel: Yeah. I wouldn’t be surprised to see Alphabet or some of these other big tech companies like Amazon (NASDAQ:AMZN) ultimately acquire some fintech providers. One thing Google mentioned, in particular, was virtual cards and improving the security of online payments. I can see them acquiring a fintech that maybe is developing some technology to that end. That’s a big problem. Online-payment security is a big problem, and all banks need that, all banks will benefit from that service.
Moser: That sounds a lot like a company out there — I think we’ve talked about before on the show — Marqeta (NASDAQ:MQ), which is in the card issuing in the virtual cards and the APIs for its customers to be able to tackle that issue. It would be interesting to see, to me, you look at something like Marqeta — it’s small enough still, granted it’s brand new to the public market. It’s still small enough today to where it’s not out of the realm of possibility. That could be a big elephant-acquisition type move for something like Google if they decided they wanted to pursue that opportunity.
Frankel: Yeah. It’s a way to use their reach to benefit from banking innovation without actually trying to be a bank themselves. I think, at the end of the day, that’s really where all these big tech companies are going. Even Apple (NASDAQ:AAPL). Apple is partnering with Goldman Sachs (NYSE:GS) on a credit card, but that’s because Apple is a consumer-products company. That’s not because Apple wants to be a bank. They have some financial services just like Google does. Google still has Google Pay, things like that. Apple, to my knowledge, has never said they want to actually offer bank accounts. I can see it staying that way. I don’t really see that being the way that all these tech companies are going.
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