Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG)’s move into the payments industry with Google Wallet is already obvious, but will Facebook Inc (NASDAQ:FB) go there too? JPMorgan Chase & Co. (NYSE:JPM) CEO Jamie Dimon thinks so, and he believes they could take a chunk out of his bank’s business. In fact, he thinks there will be some third mystery player competing for a piece of the pie as well. The electronic payments industry is a $1.8 trillion annual industry.
JPMorgan’s Dimon sees regulatory problems for Google, Facebook
Although Facebook Inc (NASDAQ:FB) Chief Operating Officer Sheryl Sandberg recently dismissed rumors that they have plans for a payments platform, some still believe the social network has ambitions in that area. Of course PayPal already competes in the space with Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG), and many have been saying that Apple Inc. (NASDAQ:AAPL) is planning a foray into the sector using its iTunes payment database. Dimon didn’t mention Apple in his interview though.
Bloomberg reports that Dimon sees a problem with these moves, however, as he said regulators will have to decide if they want to regulate these companies. He doesn’t think Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) wants to be regulated like a bank.
Meanwhile JPMorgan Chase & Co. (NYSE:JPM) will keep competing as competition within the industry heats up, said Dimon.
JPMorgan versus shadow banks
According to Dimon, JPMorgan Chase & Co. (NYSE:JPM) has been facing increasing competition from non-banking financial institutions for some time. Regulators cracked down on lenders’ capital requirements in the wake of the 2008 housing crisis. However, he said the shadow banking system, as it’s called, holds many specialized lenders, money market funds and other kinds of financial institutions which offer services that are similar to those offered by banks—but without the regulatory hurdles banks face. Banks are required to have more and more capital liquidity, and DImon said “that it will push things to that segment.”