Your Home Loan Has Been OK’d by Google?!

Here’s one to both boogle the mind and reflect the rising tide of e-commerce. Amazon and Google as mortgage brokers? Apparently so.

A new study by consulting firm Accenture reveals that a large number of Americans would be willing to do their banking with non-financial technology institutions if the companies offered such services. If given the opportunity, about 40% of consumers aged 18 to 34 say they’d consider banking with Google; 37% would consider Amazon; and 34% would consider Apple.

Could it happen?

The study noted that already, the real estate industry is seeing convergence from established players outside the financial sector. Costco Wholesale, for example, offers financial services products including mortgages, investments, and business banking in the U.S. through a third-party lender. Similarly, The Home Depot offers home-improvement financing up to $40,000, also through a third-party lender.

And a Gallup poll reveals that Americans' confidence in banks has been slipping over the years. In 1980, about 60 percent said they had great confidence in their banks; that percentage slipped to 21 percent in 2012.

As noted in an article by RealtyTrac about the trend, “While it may seem unlikely that credible competitors can emerge and transform the mammoth and hidebound banking industry, there’s a lot of evidence that not only could it happen but that it’s already begun. After all, privacy is dead and a number of online sites already have more financial information about us than any credit bureau. Like Santa, they know who’s been naughty or nice, who pays their bills and who doesn’t. How hard would it be for them to enter the mortgage business given their cash on hand and the gigabytes of information they now hold?”

With mortgages, for example, there is already an emergence and growing importance of “nonbanks;” lenders who make loans but do not have branches or ATMs. The idea is not that new competitors will replace today’s banking behemoths (actually, it is the idea), but that they will bring new competition to mortgage origination and servicing — competition that will help hold down mortgage rates.

The report also states consumers want a bank that's nimble and proactive, one that can be a part of their daily lives. The idea of 'convenience' in banking is undergoing a shift away from branch locations and toward digital products and services that mesh with consumers' 'smart' mobile-empowered lives.

IMHO: I sincerely doubt that shift is of any great proportion as many Baby Boomers – the predominant population sector in America – still want to ‘go to the bank’ when issues arise. Online transactions, while convenient, lack the ‘human touch,’ which still counts for a lot these days.

Plus the RealtyTrac article notes that while newcomers may do well against stodgy traditionalists in the financial field, it won’t be a cakewalk because there are barriers to overcome.

Information leaks do little to reinforce a sense of electronic insecurity. Identity theft and a host of viruses, worms, bots and Trojan horses are huge problems because if someone can remotely demolish a nuclear production plant in Iran there’s little reason to believe that financial accounts cannot be cracked and compromised by hackers thousands of miles away. Definite food for thought… on your iPad.