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Ask HN: Why do Big Tech companies not acquire banks?

3 points by melenaboija ↗ HN
With the recent transaction of PNC and BBVA with a cost of 12bn I was wondering if it would be possible that a non financial institution could buy a bank.

According to this [1] Alphabet had 100bn in cash on 2019 so it seems something possible.

Is it just a regulatory matter? Why would regulators care on who owns a bank?

[1] https://www.cnn.com/2019/02/04/investing/google-alphabet-cash-dividend/index.html

4 comments

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LinuxBender
Why would regulators care on who owns a bank?

If I had to guess, probably the other way around. Banks have obscene amounts of regulations, audits, compliance that would seem archaic and insane to most tech companies. This is already baked into banks operating expenses and procedures. Tech companies would have to take on massive amounts of cost and this would affect their reported earnings. Then there is the aspect of operational speed, agility, speed of R&D. Banks move incredibly slow because of the compliance burdens, at least that was my experience.

pb77
My understanding is there are so many financial regulations that it is very hard for tech companies to own, I work in financial services and I can tell you the amount of red tape and paperwork is significant both inside and need to file with regulators. The CEO had mentioned once that there were regulations that prevented companies like amazon and google jumping into financial things.
melenaboija
Well, I guess that was kind of my question. I see the situation is something like:

- Big Tech companies can't get into traditional banking business because of the regulation - Banks are loosing part of their business as they can't compete with other companies in terms of technology

I see the future of banking something like traditional banks being the back office of some other more tech leveraged companies delivering services.

Also, with these huge amounts of cash available from this giant corporations it seems possible they could find some other way to be part of the game and accomplish with regulations, as long as they assume the risk.

lazylizard
i think in general alphabet might find it easier to lend out its own money. they can already do that by buying bonds.

what a bank does. which is lending out other people's money. most governments want to be quite sure who its lent out to.