Competition goes Social for Financial Services

Its only 3 months, since I sat on a panel at the Finextra Social Media Day  at the Reuters building in New York, ruminating on the future of financial services and social along with Daniel Marovitz of Deutsche Bank and Frank Eliason, SVP Social Media of Citi.  Not content with discussing the future of financial services, social and mobile, we also talked about how social might impinge on the traditional bricks and mortar business of financial services.

Not far off, I said, referencing how Tesco (for those none UK folks in the room, that’s one of the largest supermarket chains in the UK) expanded out of groceries into clothing, household goods, furniture, electrical goods, AND financial services products – from banking to insurance, credit cards to travel products.  Tesco’s model of gaining my loyalty through my grocery shopping and its Club Card – and yes I’m a sucker for coupons – and then using my fixation with the money off vouchers and the loyalty scheme to convince me to place my financial services business (more points and points mean prizes..) with them worked exceedingly well.  Not just for me but for millions of others.  The initial partnership that Tesco had with the Royal Bank of Scotland – latterly morphed into Tesco Bank – and really proved that the loyalty network that this grocery store built up, the trust they created gained thousands and thousands of account holders for the organization.

Tesco Bank now accounts for 7% of the Tesco Group 62.5billion pound sterling revenues.

And my “not far off” came about this week, with a new launch from Google.

No no no, I’m not talking about Google +  – that so last week.

I’m talking about the Google credit card.  The AdWords Business credit card promises a competitive interest rate of 8.99% and no annual fee with the sole proviso that it can only be used for spending on Internet advertising over the search engine, according to a report from Finextra.  Google’s treasurer , Brent Callinicos says that the card will be offered to a statistically significant number of people as Google investigates how the card affects spending.  With more than a million users of the Adwords network – they’ve got a large enough audience to go after!

Hundreds of millions of people use Google every day to search through many petabytes of the world’s knowledge, in 146 different languages.   It goes without saying that Google has become a threat to the bricks and mortar business of our traditional financial services organizations.  They’ve built a loyal following (where would we be without Google maps these days?), a dependency ingrained within us (a colleagues 5 years old upon finding that her father couldn’t answer a questions retorted with an exclamation – “What do you mean you don’t know, why don’t you Google it?”) and that loyalty, that dependency is one small step for consumers, one giant leap for Google’s increasing domination.

We are in interesting times folks, interesting and exciting.  Now what remains to be seen is how the financial services market will take the fight to the social network  What’s your prediction?