How the tech sector is encroaching on the financial sector

The next credit card or checking account you get might not come directly from a bank. Tech giants like Google, Apple and Facebook are all moving into financial services.

The Apple Card, a joint venture between the tech giant and Goldman Sachs, was just unveiled last year. Now, Google is joining forces with Citi to offer a checking account in the coming months.

"A lot of these tech companies are partnering with other firms in order to get access to the financial services sector,” explained Greg McBride, Chief Financial Analyst for Bankrate.com.

McBride believes these new entrants into this field could give consumers an opportunity to get a good deal.

“Competition is always good. You’ve already seen, for example, a lot of internet banks, even some new neobanks that are popping up, that are offering some very friendly consumer alternatives," McBride said.

“Our financial transactions say a lot about what’s going on in our lives,” said Northeastern University Professor David Choffnes, who specializes in computer science and privacy issues.

Choffnes says the big catch for these tech companies is data, the ability to learn even more firsthand information about consumer behavior and spending habits, allowing companies to target online adds with even greater precision.

“They also might start looking at your purchase history and understand, for example, that you have a dog at home, and start targeting you for ads for dog food even if you’re never looked online for dog food because you always buy it in the store," added Choffnes.

That’s a turn off for Brookline resident Phil Cullinane. He already uses Apple Pay, but doesn’t want their card, even though it promises to protect a user’s privacy.

“They’re big enough, and they don’t need to be making credit card margins off of me,” Cullinane said.

For consumers who are interested in these products, McBride cautions they should check to see who is really handling the money, because the tech companies are not directly involved in that end of the business.

“You’ve got to find out who is really behind the scenes. What financial institution is really issuing this product? Make sure that it is a federally insured account before you deposit any money into it,” added McBride.

McBride also said anyone signing up should make sure to check all the fine print, so there are no surprises when it comes to fees, or minimum balance requirements, for example.

[Apple Pay Cash now allows U.S. users to send money via iMessages]

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