Australia and New Zealand Banking Group (ASX: ANZ) has a plan to challenge tech giants Google and Facebook.
The major ASX banks of ANZ, Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) are facing increasing pressure from tech players wanting to take a slice of their earnings.
Google Pay, Apple Pay and other tech offerings are gaining traction with consumers, taking a little bit of power from the major ASX banks. Facebook Pay will also soon be a thing, which isn't related to the cryptocurrency project Libra. Google is looking into ways to offer transaction accounts through Google Pay.
But today we learned that ANZ has a plan according to reporting by the Australian Financial Review.
The major bank is developing and testing new business models in a "lab" division with 40 staff.
I think ANZ is right to be nervous about what 'Big Tech' will do, they are huge competitors with big budgets that can play the long game to get into banking.
The AFR quoted ANZi (i being investment in innovation) Managing Director Ron Spector, "The integration of financial services, and other services, into customer experiences is the most significant threat to traditional banking."
What are some of the things that ANZ is doing?
It's investing in seven fintech start-ups and has also been given the objective of generating revenue in areas adjacent to banking. The fintech investments are: Lendi, Brickfloor, Valiant Finance, Divipay, Slyp, Data Republic and BUD.
The first project that has made it into the public sphere is 'The One Spot', a service designed to help first home buyers. But ANZi won't be releasing details of any other projects yet.
One of the things it is doing though is performing a scouting function to see if there are any companies that are doing things better than ANZ, with one example of trying to better assess customer income and expenses, whilst also creating something internally.
Foolish takeaway
I think this is a good move by ANZ, it can't just idly sit by whilst letting the tech giants win. The question will be whether it can be fast enough and effective enough to be involved with industry-changing developments. Time will tell, but I'm not willing to bet any money on the banks at the moment.
