How GAFA Redefined the Meaning of Innovation and Our Lives

It took four companies – Google, Apple, Facebook and Amazon – to change the way consumers see financial services, customer service and shopping. Having almost nothing to do with banking, these tech giants are now directing the pace of innovation across the whole industry and redefining our expectations, putting banks on fire with their rapid pace of transformation. While an average consumer doesn’t really notice the transition, professionals have to face the reality and take the challenge that these tech folks have suddenly imposed on finance professionals.

In fact, the four tech giants have become such a powerful and prominent part of society that the acronym ‘GAFA’ appeared not so long ago across the Web to describe this new ‘creature’.

While these four companies are an immense part of western society and serve as examples of innovation, some publications notice quite the opposite attitude towards the mighty four in Europe, where just one example of the ‘right to be forgotten’ contradicts the idea of total abolishment of the whole personal privacy thing by GAFA.

It’s interesting that just 15 years ago or so, those four companies had just been founded and were struggling like any other upstart with their competitors and with the market. According to the recruitment firm Alhambra International, in 2015, Google centralized 90% of all internet searches, Facebook took over 16% of all online time and Apple has completely transformed our interaction (we can even call it ‘relationships’) with devices. The company suggests that GAFA had a turnover growth 33% higher than China’s.

The German Die Welt has published a piece this January on the dangerous dominance of GAFA providing an impressive estimation that the four companies have a market value of $ 1.7 trillion. The publication has shared data, that suggests GAFA companies on their own have higher market capitalizations than many nations.

Ian Bremmer, founder of the Eurasia Group, has shared with the publisher an impressive insight, The industry giants undermined the official policy.

GAFA has not just redefined innovation, it went to the roots – the customer. Four companies have set the standard for leadership in customer relationships, in building loyalty and commitment. They have transformed the simple idea of selling from a financial transaction to a long-term beneficial relationship. Apple doesn’t just sell an iPhone, it offers a style, a feeling, an idea (while slipping another charger because the previous one wouldn’t fit in your new iPhone).

The corporate culture

The way these companies were able to redefine the customer experience and create a new idea of how to sell products was through the way they redefined the idea of the organization. Teamwork has come to the scene with Google that eventually reshaped the ideal relationship between an employee and employer and completely redefined the idea of the workplace.

Moreover, Google, as one of the most powerful members of GAFA, can dictate customer choices through sophisticated algorithms. Sooner or later, it had to come to financial services as well. Google has firmly established its sensible presence in payments and with its venture arm (Google Ventures) has an impressive portfolio of FinTech companies in the bag.

Google Wallet is in the process of a smooth transition from being a wallet to a money transfer service (sending money with just a phone number ‘in minutes’). Whether it is a signal for all wallets or it is a private strategic choice, Google has its fingers deep in payments. Android Pay, obviously, was the ticket to the financial services industry and with enabled in-app purchases combined with search engine manipulations, the company can pretty much sell anything to anyone.

Closed ecosystem and blind loyalty

Apple’s ticket into FinTech was Apple Pay, which consistently and aggressively paves its way into the global scene. However, Apple is responsible for other transformation that happened much earlier – the App Store. The idea of a closed ecosystem and luxury electronics that paradoxically has a never-ending desire from customers, was and is fully leveraged by the company. Apple turned each release of a new product (which can have such a minor difference compared with the previous one, that nobody would even notice), into one of the most significant events of the year. The company was able to build such a committed following that the price of the next iPhone didn’t matter to the crowd lining up to witness a ‘miracle’.

Attention is money

Facebook is the youngest member of the ‘mighty four’, but nonetheless, the media company was able to reach the top. We have previously discussed the way Facebook squeezes into ecommerce and finance, but the important part is that in a little more than a decade, the company was able to transform the way consumers spend time online and consume information. Commercialization came into the scene just recently, when the company added a shopping section. What is worth learning from Facebook, however, is the ability to grab and hold customers’ attention and time - to eat up to 20% of the users’ time online, according to BI, and hence, have a chance to sell and show what needs to be sold and shown. When Facebook has our attention, it is a matter of creativity to embed selling vehicles and techniques to get us to the checkout page.

Search engine defines the sell

Amazon is a particularly amazing case. Going from a book store to the ecommerce giant and a search engine is a long journey, which the company has taken with stunning success. In fact, some publications rely on a survey that suggests 44% of consumers are starting their search on Amazon opposed to 34% using search engines like Google, Bing and Yahoo. Moreover, Amazon already has one foot in lending with its furniture loans up to $400 launched in UK. The company is an example of extreme operational efficiency and the ability to set skyrocketing customer expectations when it comes to delivery and customer service. Involved in lending, payments, commerce, SEM and even cloud services, it wouldn’t be a surprise when Amazon comes into construction one day with drones being used for even faster delivery than Prime allows.