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The leading mobile operating systems, Google Android and Apple iOS, are increasingly taking on the role of financial services platforms. Android and iOS smartphones and tablets host applications for online banking, equities trading, myriad types of e-commerce and are beginning to serve as vehicles for mobile payments. To support finance apps, and also financial services initiatives, mobile OS and device providers have begun to integrate financial services functionality directly into the software stacks and hardware underlying these popular devices, much of which is built using open source software.
In enabling and cultivating mobile financial services, it is interesting to contrast the positions of Google Android and Apple iPhone/iOS platforms. On one hand, both companies depart from the traditional roles of OS-focused ISVs in offering actual hardware and participating materially in applications and services ecosystems. Moreover, both Google and Apple are financially robust, well-capitalized entities with substantial cash reserves, certainly on a par with existing financial services institutions.
So, should we expect to see Google Bank or Apple Investment Brokers any time soon?
Most people see Google as a search company whose core revenues come from advertising (with financial services and insurance ads in the top slot). In the mobile space, Google is also an OSV and a hardware manufacturer: Android is deployed on devices from HTC, Motorola, Samsung, Sony Mobile and a dozen other manufacturers, and Google sells its own Nexus devices directly through the Google Play app store.
In financial services, Google has made multiple forays into direct and indirect provision of financial software and services:
–Google Wallet lets owners of Android devices make payments at specially enabled point-of-sale terminals. Like mobile payment in Europe and Asia, Google wallet uses near field communication technology to effect secure payments. Although most users don’t know it, NFC chipsets are built into many Android smartphones.
–Google Finance Web APIs support the creation of mobile and online financial services applications. For example, Google Apps Scripts offer web APIs for accessing real-time and historical data, e.g., FinanceApp, accesses data from Google Finance, FinanceResult, displays results from finance queries and StockInfo provides stock-specific information.
–Google AdWords Financing is edging closer to bank status as Google recently announced a program to let businesses finance purchases of Google AdWords.
–And there are now more than 10,000 applications available in the Google Play Finance category.
In contrast to Google, Apple is first a hardware company that also develops core software for the personal computers, media players and mobile phones it manufactures (and that core software is built on open source). In 2003, Apple entered the content marketplace launching the iTunes Store, first selling music, and later videos, books and other media. Apple repeated this online retail success with its iPhone App Store, where it curates and generates revenue from a marketplace of hundreds of thousands of applications.
Despite having well-established payment mechanisms within iTunes and offering iOS developers the ability to enable in-application purchasing, Apple is still many steps away from entering the financial services arena. No iPhone or iPad yet embeds an NFC chipset, and despite rumors of an “iWallet” in iOS 6, the only wallet-like service offered by Apple is Passbook to let users organize boarding passes, tickets, gift cards and loyalty cards.
In contrast to Google, it appears that developers and users of the 16,000-plus finance apps in the AppStore must look to third-party sources for financial data and access to assets – including the Google Finance APIs described earlier.
The difference between the two mobile giants arises from several factors:
–Apple is quite risk-averse compared to Google, a company that is historically eager and financially willing to experiment in diverse areas.
–The more open, multi-OEM ecosystem supporting Android also already deploys chipsets and manufactures handsets with NFC, and would likely enable mobile payments on Android even without Google Wallet.
–Google’s search and Web APIs are ideal financial data sources and services feeders for Android finance apps.
–Google embraces open source and uses it liberally to enable its diverse portfolio of products and services, including those related to finance.
These factors conspire to make Google and the Android ecosystem realize that moving forward, enabling financial services is essential to the success of a mobile platform. Just as Apple decided to control its own destiny by eschewing Google Maps for its own (still immature) mapping technology, they will surely realize that their software platforms need more than just a nod in the financial services direction.