- Razer, best known for gaming hardware, is eyeing banking licenses in the US and EU.
- This is a risky move considering the gaming harware company will face competition from over two dozen established neobanks.
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Razer, best known as a company that sells hardware for computer gaming, is considering expanding its financial services presence to the US and Europe, per PYMNTS.
It aims to serve “the underserved youth and millennials segment,” as well as entrepreneurs and small businesses. Early this year, the California-based company applied for a banking license in Singapore, where it had already entered financial services with a virtual wallet and merchant services. Razer views its financial business as its key growth initiative outside of cloud-based gaming.
Elbowing into neobank territory is risky for a new entrant. Razer’s payments services make sense within the gaming world as platforms for in-game commerce, and to some extent, as affinity programs for the company’s customers and merchants that want to sell related content and services.
But the “Youth Bank” it plans to start and grow on the strength of its brand is an exceptional departure from its core business. With Razer’s global ambitions, it would face over two dozen established neobanks in a market that’s grossly unprofitable. After entry into the US and Europe, it would compete with heavyweights like Chime, Revolut, and N26.
With their financial services ambitions, large consumer brands don’t leave much room for smaller players. Razer is one of many nonbanks around the globe offering or looking to offer banking products. Razer’s application for a Singapore banking license came just as Ant Financial applied for the same—after both Ant and Tencent received banking licenses in Hong Kong.
Rakuten, a Japanese ecommerce company, has said that it would reapply for a US banking license. And earlier this summer, news broke that Google was working with a consortium of FIs on digital checking and savings accounts for Google Pay users. There’s a good chance that the US government will open the door to banking services from nonbanks: A US regulator has sketched out how nonbank companies might apply for and receive FDIC insurance for deposit products. This is a dangerous game for Razer to play: Without the two-sided network typical of a full-service bank or an ecommerce platform, it’s at a weak starting point.
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