The arrival of tech giants in financial services worries not only traditional banks, but also regulators. The latter have strengthened their controls while the appetite of these new players is not weakening.

By announcing the possibility, from 2021, to open bank accounts from its application Google Pay, the Mountain View firm risks making several dissatisfied. Banks first - at least those that have not signed a partnership with the tech giant - because it is the arrival of a major competitor on their core business. But also financial regulators.

The latter are indeed increasingly vigilant in the face of the arrival of GAFA in their preferred territory, considering that the latter pose a risk to the stability of the financial system. Especially since by first tackling payment, the GAFA have taken their first steps in the sector without having to comply with the most restrictive of the rules, unlike the historical players.

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Helped by their vast customer base, they managed to quickly gain market share, to the point of cheating traditional banks, as is the case in China for Ali Pay and WeChat Pay. So much so that the regulators had no choice but to bang their fists on the table when some giants crossed the yellow line.

Outcry

The latest episode in this balance of power came earlier this month, when the Chinese regulator, in a spectacular move, stopped the IPO of Ant Group, the subsidiary of the giant Alibaba, 48 hours from what was to be the largest IPO in history at $ 35 billion. No question for the power to lose control of the mastodon behind Alipay.

In beijing's sights: the powerful billionaire Jack Ma, founder of the e-commerce giant that has become the richest fortune in China, but also the weight of Ant Group and its 711 million active users, which is increasingly overshadowing traditional Chinese banks with its increasingly diversified services, ranging from payment to credit to savings.

Chinese authorities have indicated that in the future, Ant Group will face more scrutiny and that the company may be subject to the same capital and leverage restrictions as banks.

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This tightening of the screws pleases traditional players. "In the past, many technology groups have benefited from not having the same regulatory regime and supervisory overheads as banks," Piyush Gupta, the head of DBS Group Holdings, said on Thursday, as his bank lost market share in Southeast Asia to Ant.

Digitalization of transactions

Another symbol of the increased vigilance of regulators: the authorities' outcry against Libra, the digital currency project developed by Facebook. Faced with such resistance, the  Mark Zuckerberg's group was forced to drastically lower its ambitions. "There has been an awareness that by letting the digital giants act, there is a real risk of stability, but also of sovereignty," says a connoisseur of the sector.

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Coronavirus: contactless becomes the world standard for card payments

the latest initiative of Google in the banking sector shows that the appetite of the tech giants does not stop there. This is not likely to reduce the vigilance of financial regulators. Especially since the covid-19 crisis has accelerated the digitalization of transactions, including the explosion of contactless payments. This is even more likely to tip the balance of the payment sector on the side of the tech giants.