Google challenge

Banks and fintechs join forces against tech giants

  • Why it matters

    Why it matters

    U.S. tech firms Google, Apple, Facebook and Amazon are making increasingly ambitious forays into financial services, while German banks have been slow off the mark when it comes to digitalization.

  • Facts


    • Google this week launched a money sending service using its Gmail email system.
    • Apple and Facebook have similar message-based payment services, while Amazon offers small loans.
    • In Germany, banks have already forged 70 partnerships with fintechs to ready themselves for the coming battle.
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Man uses iPhone 7 smartphone to demonstrate mobile payment service Apple Pay at cafe in Moscow
Payment systems such as Apple Pay are growing in popularity. Source: Reuters

Google’s announcement this week that it had updated its Gmail program to let its users send and receive money didn’t get much public attention. But to people working in the financial sector, it was a bombshell.

To be sure, the new service doesn’t amount to a technological innovation — established banks are working on or already offering their own phone-to-phone money transfer apps. But Google’s push into the payments market has made bankers around the world realize that the U.S. tech titans are moving into their back yard.

Google launched Android Pay, a payments service for smart phones, a year-and-a-half ago, and Apple has had a similar service even longer.

All four big internet companies — Google, Amazon, Facebook and Apple – already offer financial services. They’re no match yet compared with the plethora of services provided by traditional banks. But the banks are getting worried, more worried in fact than about competition from the legions of financial technology start-ups.

Confronted by a common enemy, fintechs and banks are increasingly starting to cooperate. In Germany, there are already 70 such alliances.

“The digital pioneers the banks have to confront today are Google, Amazon, Facebook and Apple.”

Friederike Stradtmann, Accenture Strategy

“The question is no longer how banks and fintechs compete with each other. The question is how and where the two can work together and how they can innovate together,” said Friederike Stradtmann, a specialist for digital business models at consultancy Accenture Strategy. “The digital pioneers the banks have to confront today are Google, Amazon, Facebook and Apple.”

Bank executives are well aware of the challenge they face. “The ability of banks to survive depends heavily on their adaptability,” Asoka Wöhrmann, the head of retail banking at Deutsche Bank, recently told a Handelsblatt conference. Competition with the big internet players and with fintechs would “dramatically change” the banks, he added.

At present, the U.S. tech giants have only carved out small niches of the banking business, mainly in the U.S. “But they’re pioneers in handling data,” said Ms. Stradtmann. “As soon as they decide to offer more financial services to their customers they will set standards for banks as well.”

Apple offers its Apple Pay service in many countries and there’s speculation that it will soon be launched in Germany. Apple Pay cooperates with credit card companies and banks. Facebook users can send money via the messaging service Messenger. Online retailer Amazon offers loans to other retailers.

Many banks haven’t been taking the threat seriously until now, said André Bajorat, the head of financial start-up Figo which works with banks. “The banks must cooperate with fintechs because they haven’t been particularly innovative themselves so far and because they need to bring certain new services into the market quickly,” he said.

Research by Handelsblatt shows that the number of cooperation deals between banks and fintechs has increased over the last year, and many more alliances are being considered.

“The banks must cooperate with fintechs and try working with them,” said Hans-Peter Burghof, a professor of banking at the University of Hohenheim. “It’s also about making the banks more innovative themselves.”

That’s easier for private sector banks than for cooperative banks and savings banks which work in networks, he added. But all segments of the banking market are working to get fintechs on board.

Deutsche Bank and its retail unit Postbank are increasingly working with fintechs, as are smaller banks such as Fidor Bank, Solarisbank and Wirecard. Commerzbank, Germany’s second-largest private-sector bank, invests heavily in financial start-ups.

In many cases, alliances are forged with fintechs that act as service providers for banks. Gini, for example, makes it easier for customers to fill out bank transfer forms. Finreach and Fino help customers change their accounts. Fintechs like that don’t want to compete with banks; they want to help them keep their customers.

Other fintechs started out competing with banks but have since sided with them.

When digital asset manager Vaamo was launched in 2014, it positioned itself as an alternative to banks. But since then it has struck deals with an array of banks and provides a so-called robo-adviser service for the German clients of Santander, online bank 1822direkt and smartphone bank N26. It’s in cooperation talks with further banks.

“For young firms like us it’s very difficult to gain the trust of private customers. With strong partners we can reach customers far more quickly with digital investment solutions,” said Vaamo co-founder Thomas Bloch. He added that Vaamo was also forging direct relationships with customers as a second pillar of its business.

Berlin-based N26, however, is one of the declining number of fintechs that are still competing with traditional banks. It said on Monday that it has more than 300,000 customers. “There aren’t many big fintechs with lots of customers,” said Valentin Stalf, the founder and chief executive of N26. “That’s why it’s tempting to cooperate with banks.”

Banks can take comfort from the fact that many fintechs are struggling to generate new business and have to look for partners. Even big fintechs are starting to feel the heat from the U.S. tech firms. Google’s smartphone payments system competes with well-established online payments firm Paypal which is also trying to gain customers for phone-to-phone payments.

That should serve as a warning to the banks: no one’s safe from Google, Apple, Facebook and Amazon.


Elisabeth Atzler has been a banking correspondent of Handelsblatt since 2012. Katharina Schneider is a correspondent in the finance section of Handelsblatt based in Frankfurt. To contact the author:,

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