The GID Report #9 — globaliD at Money2020, “All the tech companies are banks now”

7 min readNov 21, 2019

Welcome to The GID Report, a regular update that includes globaliD team news, market perspectives, and industry analysis. Check out the last report here.

This week we’ll be covering:

1. globaliD at Money2020

2. Facebook Pay

3. Google’s checking accounts

4. “All the tech companies are banks now”

5. Stuff happens

6. Shoutouts

1. globaliD at Money2020

The team at globaliD recently returned from Las Vegas, where we hosted a private breakfast during Money2020 for industry friends to demo some upcoming features for our identity platform. For the team, it was the culmination of a year’s hard work of product development. Talking about the importance and potential of portable identity is cool. But showing it is even cooler. And we packed the room:

For many of the attendees, this was the first time they got a high level, material look at how the entire globaliD ecosystem comes together. One noted that it was a bit of an “AHA” moment for him, according to Vadim.

Then on Tuesday, Greg participated in a fireside chat at the conference proper (part of the identity + trust track) — moderated by Melissa Koide, CEO of FinRegLab.

Greg, during the fireside chat:

“The big question in my mind — is the future going to be driven top down either by governments or corporations, or is there a way that there could be a bottom up form of identity that’s actually practical, compliant, private, and secure.

If you don’t have a vision for a bottom up identity, then you’re going to have a solution either like a more Orwellian Chinese solution. Or you might have kind of a Mad Max version where everyone’s anonymous, kind of a bearer bond world, or some hybrid. If it’s going to be run by Facebook, it might be called Creepy Facebook, where it’s kind of secure, kind of private but not really.

So we’d like to think that there’s a fourth alternative — that there is a way where there could be identity that users control, but it works in a practical way and it doesn’t require all of us becoming experts in sharing the fine-grained details of our identity.”

2. Facebook Pay

The big news this week is the launch (or re-launch rather) of Facebook Pay:

Simplifying Payments with Facebook Pay — About Facebook
Via Mitja — Facebook Pay is a new payment system for WhatsApp, Instagram, and Facebook
Via Craig — Facebook wants you to pay people on Messenger, Instagram and WhatsApp with Facebook Pay — TechCrunch

Felix Salmon is framing it as a response Libra’s failure:

Facebook’s move arrives after the de facto death of its Libra cryptocurrency project. CEO Mark Zuckerberg has said that Libra won’t become a reality without U.S. regulatory approval, and there’s no chance of any such approval arriving in the foreseeable future.

Although the balanced perspective might be to view it as a stop gap.

In any case, here’s Mastercard on why they dropped out from Libra (via Mitja):

Ari Sarker, the co-president of Mastercard Asia Pacific, participated in an interview with Bloomberg a few days ago, revealing the company’s relationship with Facebook and the Libra project. The credit card giant, according to Sarker, recognizes the power and capabilities of blockchain, but believes that Facebook is missing key components that would make Libra financially sound.
The executive stated, “I think the pullback from Libra was more determined by us in the manner that we are essentially a regulated entity where we work with a number of markets with supervision by central bank regulators and we’ve been very clear from day one that our partnership with Libra was recognizing those obligations and recognizing that we have commitments across our regulatory frameworks and therefore stay true to that.”
Apparently, Libra is not living up to those same obligations and isn’t ready to be a part of a global financial network. Upon closer examination of the project, Mastercard felt it needed to bow out because, “The intention really was that being inside the tent would allow us an opportunity to shape some of those conversations. We’ve stepped back because we felt some of those basic core tenets were not being adhered to,” according to Sarker.

3. Google’s checking accounts

Then there’s Google, which is launching checking accounts, as reported by the WSJ:

Via Mitja — WSJ News Exclusive | Next in Google’s Quest for Consumer Dominance: Banking
Mr. Sengupta said Google wanted to bring value to consumers, banks and merchants, with services that could include loyalty programs, but it wouldn’t sell checking-account users’ financial data. The company said it doesn’t use Google Pay data for advertising purposes and doesn’t share that data with advertisers.

That part is worth mentioning given the press Google is getting around:

Via Mitja — Google reveals ‘Project Nightingale’ after being accused of secretly gathering personal health records

Then there’s Apple, which is dealing w/the headache that sometimes comes with financial services (outsourced to banks):

Via Mitja — Apple Card is facing a formal investigation by Wall Street regulators over gender discrimination allegations made in a viral tweet

It’s making headlines, but you figure it’s more noise than anything:

The other side: Goldman Sachs, which runs the underwriting and issues the credit for the Apple Card, told Axios’ Dan Primack yesterday that the consulting firm Charles River Associates signed off on the card even before it was launched. CRA certified that there was no “unintended bias coming out of the decision engine,” according to Goldman’s consumer bank CEO Carey Halio. (I emailed CRA to confirm this, but did not receive a reply.)

4. “All the tech companies are banks now”

That’s the title of a section in one of last week’s Money Stuff by Matt Levine. It’s certainly the theme of the week. But as Matt points out, none of this is as revolutionary as one might expect. In the context of all the hubbub, Matt notes:

All of these stories are … very … boring? Like from first principles it has long seemed inevitable that the tech giants would get into financial services in some way. They have way more name recognition and contact with consumers than any bank does, and at least until recently they had much better reputations than most banks. People use their products constantly and enthusiastically. Certainly they are better at advertising than banks are; Facebook and Google are basically pure dominant advertising companies. So if they want to sell you a credit card or a checking account, or have you pay your friends through their apps, they should be able to manage that.
But it’s not just a marketing advantage. It’s a tech advantage. Tech companies have fast smart computers and fast smart computer programmers. Computerized decision-making is central to modern finance, and intuitively you might expect tech companies to be better at it than finance companies. They have more data than anyone else, and they have more expertise in processing it. They know everything about everyone, so presumably they should be able to make smarter credit and investing decisions than, you know, some bank relying on FICO scores or whatever.
There are big regulatory barriers to getting into a lot of financial-services businesses, but it does sort of seem like the giant tech companies should have the money and expertise and political clout to manage those barriers and comply with, or lobby to change, the regulations.
But in actual fact “Apple launches a credit card” means that Goldman Sachs Group Inc. launched a credit card and Apple, like, designed the packaging and marketing for it. Google’s checking accounts will be checking accounts at Citigroup Inc. (or Stanford Federal Credit Union), only Google will wave a magic wand over them (and, presumably, advertise them). Facebook Pay links to your credit card (or PayPal). The tech companies are front ends for regular old banks.