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Goldman Sachs, General Motors and the race to capture connected car commerce

Goldman Sachs, General Motors and the race to capture connected car commerce

It looks like a race is shaping up to determine the future management of General Motors’ credit card business. This week, The Wall Street Journal reported that Goldman Sachs is aggressively pushing to acquire the GM card, arguing that it’s the best company to usher GM into an era of commerce where cars will be the next great connected portal.

However, the Journal cited unnamed sources as saying that the London-based Barclays is also bidding for GM’s card business, while current issuer Capital One is unlikely to let the account go without a fight.

The GM card has about $3 billion in outstanding balances, making it an attractive target. But the Journal said that Goldman and Barclays aren’t as interested in what the card is today so much as what it has the potential to become in a future world of connected cars.

As GM cars are fitted with various smart features into their dashboards, consumers could use the card to connect with businesses directly from their vehicles. Drivers could easily pay for gas or groceries, book hotel rooms or order takeout food with a simple voice command or tap of a dashboard button.

For Goldman, a deal for GM’s credit card business would come as the investment bank is already pursuing a high-stakes plan to transform itself into a wider-ranging, consumer-focused financial services company, according to the Journal.

Goldman has already been pushing into consumer credit, most notably with its 2019 team-up with Apple on the Apple Card. The firm has also spent years expanding Marcus, its online banking service that began offering savings accounts and personal loans in 2016.

And while Goldman and Barclays are making news for their potential pursuit of GM’s card and car-connected commerce, they’re just the latest entrants in the race.

Ned Curic, vice president of Alexa Auto, told CNBC late last year that demand from the auto sector for voice-activated technology was “through the roof.”

“Two-and-a-half years ago, we had nothing,” he said last December. “We’re much further than I thought we would be. I’m quite pleased with the speed we were able to build and deploy.” 

Amazon is looking to jump on drivers’ increased desire for connectivity in cars, aiming to develop a smooth exchange between Alexa at home and in automobiles. At the same time, automakers are working to improve the quality of voice recognition in cars. 

Ten automakers had already signed on with Amazon as of early this year, with more expected to do so by the end of 2020. Arianne Walker, Amazon’s chief evangelist for Alexa Auto, told CNBC that Amazon was “essentially talking” with all major automakers about partnering in some form.

“It’s really more a matter of getting things lined up for the cars that are going to be released as opposed to any hesitation,” she told the network. 

Meanwhile, this week also saw Google’s GPS navigation app, Waze, roll out contactless payments for its 130 million U.S. active monthly users. With the new launch, drivers who pull into participating stations will get a notification on Waze prompting their Android or iOS device to securely pay through each company’s app.

“Waze is committed to continuing to help businesses leverage innovative technology to adapt, evolve and engage with customers,” Andrew Kandel, Waze U.S. country manager, said in a statement.

And it’s not just Big Tech firms hoping to jump into the automotive commerce experience. Dan Gittleman, CEO at automotive software supplier Xevo, told Karen Webster in a late 2019 interview that the auto industry’s original equipment manufacturers (OEMs) also want in on the potential commerce action. While Amazon, Google, Apple and others may want to control connected commerce transactions themselves, as the technology is embedded into the car’s infotainment system, that might not be the deal they’re offered.

“It doesn’t have to work that way,” Gittleman said. It will be up to the OEMs to negotiate the best deals they can with Amazon, Google and others in terms of the technology that will play a big role in connected vehicles.

Companies are racing to get into the connected car economy because of its lucrative potential. PYMNTS’ Digital Drive Report found that connected car commerce represents a $230 billion opportunity.

What are U.S. consumers doing with existing connected car technology, like smartphones plugged into the dashboard?

According to our data, 47 percent look for gas stations, followed by 35 percent who are ordering food for pick up at the drive-through and 33 percent who buy coffee for drive-through pick up. Smaller percentages use technology to order groceries or other items for pick up in the store.

Of course, consumers are spending less time in their cars than they did when we conducted our survey, as more of them are working from home. But Americans were already demonstrating in the pre-pandemic era that they were getting comfortable using their cars as commerce command centers.

It seems likely that those same customers – whose lives have generally become highly digitized because of COVID-19 – will be even more ready to turn their cars into digital shopping centers when they’re back on the road.

That means the race to “own” connected car commerce will likely carry on beyond Goldman, Barclays and Capital One’s battle for the rights to issue GM cards. After all, the reward at the end of the connected car tunnel looks like it will be too big to ignore. 



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