Yahoo Finance, a division of the once dominant eponymous web portal, is the largest business news website in the US by monthly traffic. Now, it’s becoming more enmeshed in the business of finance through a partnership that will offer brokerage services directly via the Yahoo Finance app—a strategy that could be a sign of things to come for the rest of the industry.
Fintech generally refers to companies like SoFi, TransferWise, and Revolut, whose ambition is to use technology to challenge traditional banks. What Yahoo Finance is doing is a little different—its app will add online brokers like Fidelity and E-Trade to its platform, but it won’t make any money from the brokerage charges. Instead, Yahoo Finance (now part of Oath, a Verizon-owned company), which has about 41 million mobile users, is trying to boost usage of its app.
The platform is targeted at devoted investors and provides more financial data for free than you can get outside of a Bloomberg terminal, according to Michael La Guardia, Yahoo Finance’s head of product. He says the company already had a lot of overlap with brokers since they’re among its major advertisers.
La Guardia declined to detail what’s coming next, but the partnership with online brokerages raises some interesting possibilities. Amazon, for example, is a distributor for other companies’ products, but it also sells its own wares, from batteries to laptop cases.
Of course, that’s not so easy in the financial world. Banking-type activities are heavily regulated and can require a heavy dose of capital (cash) holdings just to operate. But it happens—Alipay almost accidentally started the world’s biggest money market fund (paywall) when it gave users a way to park their money from mobile payments. Amazon, meanwhile, offers credit to its merchants and has made more than $3 billion of loans, according to the World Economic Forum (WEF). Facebook has ambitions for its app to do just about everything, including financial activities. Tencent’s WeChat in many ways already does.
And there’s the data—arguably the world’s most important commodity now. Yahoo Finance is sitting on a lot of it, and it’s the type of information hedge funds pay a lot for to help gauge sentiment and trading intentions. La Guardia said he’s had those types of conversations, but is cautious about it. Rather than starting a new business, he says Yahoo Finance is thinking about how to the make the data it gathers more useful for its users.
For now, Yahoo Finance will mainly be a conduit for financial services. But even that that type of model can eventually present risks for traditional banks, according to Jesse McWaters, a project lead at the WEF. If contact with customers (the interface) is taken over by technology firms, it becomes more difficult for banks to cross-sell their other products. It could also make banks vulnerable to becoming even more like utilities, unable to compete on much more than price. In such a world, where prices are easy to compare, size is almost all that matters, since being the second-cheapest option will do little lure customers.
People usually think about “disruption” coming from upstarts funded by venture capital, but sometimes surprises come from less obvious places. Netflix made the leap from DVDs-by-mail to streaming video to making its own movies. Maybe the next surprise could come from a decades-old web portal built on search and email that ends up in the financial services industry.