86 400 co-founder: Why would Google bother getting a banking licence?
Anthony Thomson and Chris Skinner on whether Australia's banks have to worry about big-tech coming for their lunch.
Chairman and co-founder of one of Australia's newest digital banks believes technology giants such as Facebook, Amazon and Google will not bother applying for banking licences of their own, saying the regulatory hurdle of launching a bank is not worth it for big-tech. 86 400 chair Anthony Thomson discussed what the major banks do have to worry about on Finder's business show The Disruptors' Club with author and global financial expert Chris Skinner and host Fred Schebesta.
"Are the fangs of the Facebooks, the Apples, the Googles of this world going to come in and eat banking lunch? And I think the answer to that is no they won't," Thomson said. "Why would [they] bother to get a banking licence?"
Thomson said the regulatory hurdles and capital required for a banking licence would not make the gains worth it when technology companies could just come and take smaller bits of bank business.
"I think they're going to just eat the interesting bits of the big bank's lunch," he said. "And eventually, the big banks are going to be left with the unprofitable rump and will just kind of turn into utilities."
In regards to getting a banking licence, Thomson is speaking from a wealth of experience. 86 400 is his third bank, having previously launched atom Bank and Metro Bank in the UK. Thomson said he raised "about a billion dollars" over the past 11 years in order to fund his first two banks.
According to Chris Skinner: "To launch a full-service bank is going to require a lot of capital [...] it's about 100 million dollars to get through the starting gate."
Skinner said large tech companies are likely to look at banking adjacencies that will help leverage their own core business.
"Of course Amazon wants to get into payments, because every time you're checking out on Amazon you use someone else, so let's try and help that process," Skinner said. "Same with credit in the Amazon Marketplace. A lot of small businesses, why should they struggle to get money? Let's help them get money. But for deposits? Service-based banking? Nah."
But do the big banks actually have to worry about technology companies?
"I think there is a great danger that [banks] will become a commodity. I don't think it's a certainty," said Thomson. "If you look at the Facebooks you look at the Googles, the Amazons of this world, they are obsessed by customers. But they are also hugely profitable."
Thomson said that the big banks are instead obsessed with quarterly numbers and have lost sight of the customers.
"If they continue to act like this, the profitable parts of their business will be eaten."