Google, Apple pose a future threat to Big Four

Throughout history, there have been certain industries, such as the banking sector, that society has always assumed to be safe from change and modernisation. After all, individuals and businesses are always going to rely on the banks to store money and accrue interest. Meanwhile, they will always turn to the banks for loans to make acquisitions, right?

What was once considered a sure-thing is now actually being questioned. The likes of Google (NASDAQ: GOOG), Apple (NASDAQ: AAPL) and eBay’s (NASDAQ: EBAY) PayPal business could, in fact, pose as a future threat to the very fundamentals behind the services that banks, such as Westpac Banking Corporation (ASX: WBC), offer.

Google has developed a new product known as ‘Google Wallet’ which runs off near field communication (NFC) technology. The product allows users to simply swipe their smartphones over an Eftpos terminal to make payment. According to Phil Chronican, ANZ’s (ASX: ANZ) CEO of Australia, Google Wallet at this stage merely piggy-backs off the current payment infrastructure provided by the banks and card providers, such as Visa and MasterCard. However, due to the rapidly changing visions of the digital giants, Chronican suggests that the question is now “whether the way they see the world today is going to be different in three to four years’ time. That’s why we have to be concerned”.

Should these companies push the digital wallet concept further, the need for actual cash could become obsolete, whereby we could become a cashless society. What’s more, without the general need for cash, the relationship held between the banks and customers could lose its importance, which would pose as a very large problem for the banks.

ANZ and Commonwealth Bank of Australia (ASX: CBA) have both recognised this threat, and are looking at ways to modernise their systems, however, Westpac and National Australia Bank (ASX: NAB) are currently lagging behind on that front and will need to acknowledge this as a legitimate threat and act accordingly. It is believed that if banks are to remain successful in the future, they will have to change their business models and offer superior customer service.

Currently, each of the banks still appear to be quite expensive investment options, despite having fallen in value significantly in the last month.

Foolish Takeaway:

Although there haven’t yet been signs that the tech giants are necessarily trying to take business from the banks, it is certainly a real threat – much like online retailers have stolen enormous levels of market share from brick and mortar retailers.

The Australian Financial Review says “good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit.” Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More Reading:

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article. 

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!