The Fintech Fivesome: the Unlikely Alliance of Google, Amazon and more

In what appears to be the “Avengers” of the world’s largest tech companies, the most well-known names in tech have united to form a lobbying entity pitching Capitol Hill on Fintech and financial regulations. The origin story of this collective dates back to November 2015, and is reflective of the enormous power wielded by these companies separately and especially as a united front. Today, Equitise wants to alleviate the mystery surrounding the reasons behind this collective, and assess the regulation agendas of its members – what brings together the world’s biggest tech giants?

The Backstory

Apple, Google, Amazon, PayPal and Intuit have joined under the banner of ‘Financial Innovation Now’, setting aside the deeply entrenched and self-evident competition between one another for a common goal. They want to educate policy makers on their industry. The group has published a white paper, containing some striking advice for their Capitol Hill counterparts. It stated that the present overreach by regulatory bodies works as a hindrance to innovation and investment. The amount of time, money and resources required to match regulatory standards prevents startups or innovative companies from entering the fray. The input of some of these big names is thus somewhat surprising, given these barriers to innovation would be seen to benefit the status quo.

The Reason For The Fintech Fivesome’s Regulatory Standpoint

‘Financial Innovation Now’ put forward the case in its white paper that the regulatory agencies were dysfunctional, with the Capitol Hill process ultimately disappointing the consumer who must bear the costs of compliance and poor service. Competition is not prospering in the market but, ironically, amongst the various agencies and bureaucracies who must pitch in to assist the compliance burdens. Although the companies do not vilify regulation as a whole, they do suggest the present framework lags behind the practical realities of being a tech company in 2016.

What Does Their White Paper Say?

They discuss two key topics: payments and lending as they relate to the Fintech industry. The vision of PayPal and similarly innovative payment companies is stymied by current legislation that prevents competition from alternative payment providers, despite widespread industry recognition that they are the way of the future. The legislation impacting these industries, however, stems from the pre-digital era, incapable of keeping apace with the enormous leaps made by the aforementioned companies, let alone the emerging ones into the market.  The convenience and security that is offered by new payment methods is supported by consumers and the industry alike, yet these companies have not been able to truly capture the market owing to the barriers of compliance costs and the regulatory burdens in place.

Going Forward

Any user of Apple Pay or Google Wallet can attest that mobile payments are here to stay, mirrored by the fact they are already widely accepted. Both PayPal and Amazon now work as credit lenders, and while the likes of these companies are well-equipped to handle the necessary compliance costs to gain the lending status, startups, for the present, are not. When the rules are reviewed and 21st century legislation is enacted to boost emerging startups, we will truly be able to see the capabilities of the new technology. In the meantime, these tech giants merit praise for the endeavours to push innovation and call for regulatory change.

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