he world’s largest tech companies are masters of their domains: Apple in phones; Google in search; Facebook in social media.
Why stop there? All three are going into financial services, and if past is prelude, they intend to dominate the space.
To date, Apple appears to have a leg up on the others, by virtue of its omnipresent hardware. It has also, according to some sources, been the most aggressive. If you use an iPhone, you must use Apple Pay, for instance (even though legally you shouldn’t have to).
The company launched a credit card backed by Goldman Sachs in 2019, and in mid-October announced it will allow users to park rebates earned from use of said credit card – named, not surprisingly, Apple Card – in a savings account, also from Goldman Sachs.
Apple is massive, of course, with a market capitalization of roughly $2.29 trillion. At $1.26 trillion, Alphabet, Google’s parent, is worth slightly more than half that. By contrast, Meta, the company formerly known as Facebook, is worth a paltry $360 billion.
By comparison, JPMorgan is the largest bank in the United States and fifth largest in the world in terms of total assets. For a sense of scale, the total assets of JPMorgan are $3.95 trillion, which is slightly more than the annual budget of the US government.
US banks alone had about $28 trillion in assets as of 2020, with the top four banks holding about $12 trillion of that.
What if the banking sector turned the tables?
US federal law prohibits the merger of, say, JPMorgan and Apple. But, if the book value of the acquired assets does not exceed 10% – the Federal Reserve threshold for bank risk (I’ll spare you the jargon) – or $10 billion in value, there is the possibility of a financial holding company (under which a bank can operate) buying a smaller entity, then leveraging it.
US banks hold nearly $900 billion in credit card debt. With the average credit card assessed interest rate north of 16%, those interest payments add up to tremendous monthly recurring revenue.
And it doesn’t take much to imagine that the financial services industry will push back – hard – on regulators, should Apple (or Alphabet or Meta) take much of a bite out of that debt pie.
So consider what the printed circuit manufacturing world would look like if the top 10 customer list included Bank of America, Citigroup and Wells Fargo. How quickly would those financial services firms be able to ramp procurement and quality operations? Where would they be located, and how large would they be? What (additional) pressure would be brought to bear on employee sourcing? Would design be performed in-house or out? Would they team only with top-tier manufacturers, or would they partner with regional specialists?
Uber upset the personal logistics space by blasting holes in municipal codes covering licensing of hackneys (taxis). Likewise, we already see some banks and credit unions implementing mobile technology solutions that enable faster access to personal or company assets using third-party platforms like smartphones. This could happen.
If you think it’s farfetched, remember this: Once “just” a contract assembler, Foxconn now owns huge standalone operations in semiconductors, telecom and electric vehicles, among others.
Mountains can move in many directions.
PCB West a success. Thanks to all who attended and exhibited PCB West in October. Nearly 2,000 industry professionals, representing some 35 countries, registered for the conference and exhibition. Of particular note was conference registration, which reached its highest point in more than 10 years. We are already looking forward to PCB East next May in the Boston suburbs.
Staff updates. Finally, I’d like to welcome our new managing editor, Tyler Hanes. A graduate of the University of Alabama with a degree in journalism, he comes to us after nearly six years in regional newspapers followed by a year in communications with a trade association. Tyler will be in the PCEA booth at PCB Carolina in November; please be sure to say hello.