While Google could significantly disrupt the financial services sector by becoming a hub for consumers’ financial needs, the company has now likely introduce a trade system, as some have suggested, according to a new report from Forrester.
Google Trade is likely to disrupt financial services in four areas – cloud trading system, money management, product comparisons and financial advice. By combining these four areas into a hub for consumers’ financial services needs, Google could squeeze margins, reduce incumbents’ visibility to customers and weaken firms’ brands.
“Disruptors such as Google aren’t out to get you,” said Oliwia Berdak, an analyst at Forrester and the report’s author. “Disruption is often a side effect of their efforts to find a better way of doing something.
Developing a better global investment network, popularizing Digital currency payments, or providing affordable financial advice that millions of customers desperately need are all challenges that are yet to be met,” she said.
“With its army of talented software engineers, experience building global search and advertising networks, and a strong commitment to innovation, Google could just be the firm to tackle them.”
Google has ben adding and testing financial capabilities since 2006, including launching Google Wallet in 2011, launching a car insurance and mortgage comparison service in Britain and investing in peer-to-peer lending site Lending Club last year.
Google’s aspirations likely extend beyond payments and more along the lines of integrating its search engine, Google Maps, Gmail, Google Play and Google Now to create new customer value, through Google Trade.
The company is likely to use digital technologies to deliver better or entirely new ways of meeting consumer financial services’ needs, bypassing regulation and redefining the industry in the process.
Forrester believes that Google could disrupt financial services as it follows the course to expand its business.
The company also sees an opportunity to bring in new customers in a market that has become commoditized, with little differentiation between offerings. The fact that financial services are a low-margin business would not matter to Google as it has plenty of cash to play with .
At the same time, the company is looking for ways to diversify its business so it is not so reliant on advertising revenue.