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There's been a long history of non-finance companies branching out into finance. - Sears: had Allstate for insurance and Discover Card for credit. Unlike most

• zarzavat 5y ago
  Famously Sony made more from insurance than electronics.
  • robocat 5y ago
    That was back in 2010 when although the financial services was a small percentage of revenue it made up a good percentage of profit - nice graph: http://www.fromedome.com/2011/11/sony-profits/ http://www.fromedome.com/2011/11/sony-profits/ Now the segment that makes the most is games: https://www.statista.com/statistics/297533/sony-sales-worldwide-by-business-segment/ https://www.statista.com/statistics/297533/sony-sales-worldw... which shows a beautiful graph showing just how variably some of their business segments generate profits/losses per year - notice how segments disappear from, or appear on, the graph. Edit: Disclaimer: I am not a financial expert, but your fact seemed a little odd to be true. Financial services at Sony do look reliably profitable (perhaps mostly recurring revenue and use reinsurance so predictable profits?)
• oblio 5y ago
  Car dealerships get most of their profits from after sales service and financing.
  • after_care 5y ago
    Car dealerships usually make those financing profits as (essentially) commission.
  • hellbannedguy 5y ago
    That is mainly due to manufactures hiding info from their own customers, and Independant shops. That whole Right to Repair. The typical consumer doesn't like paying $290.00 plus hr., the minute the warranty ends. I hope they don't like being fleeced? I see them sipping Starbucks in the lounge, and wonder sometimes.
• throwaway894345 5y ago
  > Sort of strange to realize that a lightbulb company has a bigger subsidiary that sells financial services. It's more profitable to make money selling money than manufacturing lightbulbs. GE sells a lot more than lightbulbs and financial products.
  • jasode 5y ago
    >GE sells a lot more than lightbulbs :-) With a "lightbulb company", I was just using a rhetorical device of describing something in banal and obvious adjectives to the average consumer to contrast it with something non-obvious. E.g. The "hamburger company" McDonald's is actually one of the largest real estate holders that makes more money from land rent than food. Adding later clarifications of "McDonalds sells more than just hamburgers such as salads and eggs in English muffins" isn't necessary for most readers.
    • bombcar 5y ago
      To be precise on the McDonald's thing, it rents the land to the franchises and extracts the franchisee profits that way as no doubt it's tax efficient.
      • lotsofpulp 5y ago
        How is it tax efficient? Why do all franchisors not behave in the same manner? The land under hotels are very rarely owned by the hotel brands themselves.
        • quartesixte 5y ago
          I thought the real reason was to exert control over franchisors, so that in the event of a McDonald’s going rogue they can revoke the lease and end the franchise.
          • gruez 5y ago
            >so that in the event of a McDonald’s going rogue they can revoke the lease and end the franchise Why they can't revoke the franchise agreement?
• asdfasgasdgasdg 5y ago
  Talking of this, wasn't the issue for OnlyFans related to payment processing and banking? What's to stop a company like that from buying a bank and setting up its own credit card? Is the main issue that it would still be a visa/master/discover card, and therefore they would have the same payment processing woes?
  • judge2020 5y ago
    In theory nothing, in practice setting up a bank is a big undertaking and a national bank more so.
    • repomies69 5y ago
      Nothing with banking is technically that difficult, it is about licenses and permissions.
      • salawat 5y ago
        Hahahahaha. No. You have no idea whatsoever. The financial services industry might as well be a surveillance mechanism for the U.S. government at this point. Compliance/AML/KYC is huge, complex, and a giant pain in the arse.
        • mcny 5y ago
          Absolutely. Simple Bank tried so hard and so long. It just isn't easy to start a bank and probably for a good reason. For every well intentioned startup like simple, there will probably be a thousand snake oil salespeople.
  • jasode 5y ago
    >, wasn't the issue for OnlyFans related to payment processing and banking? What's to stop a company like that from buying a bank and setting up its own credit card? Because having an "OnlyFans Bank" to underwrite the "OnlyFans Mastercard" wouldn't accomplish anything because the credit-card _network_[1] was also getting more restrictive about the adult content rules. The major separate entities in the chain of making credit cards work: - processors, gateways: e.g. early PayPal, Stripe, - payment networks: e.g. Mastercard, Visa - merchant banks: e.g. Wells Fargo Merchant Services, Worldpay Getting transactions rejected by any of those 3 middlemen would be a showstopper for many businesses. If heightened fears about child pornography and sex trafficking causes all 3 financial layers to crack down with stricter rules, it would be impossible for most businesses like OnlyFans to overcome it. So being your own bank to get around Wells Fargo Merchant rules doesn't solve the issue for Mastercard's rules unless you're willing to create a new payment communications network and convince millions of consumers to apply for a new credit-card using that unfamiliar network. It's not impossible as Discover Card and American Express did it but even they don't have the wide acceptance of Mastercard/Visa. [1] Mastercard _network_ cracking down on adult content: https://www.mastercard.com/news/perspectives/2021/protecting-our-network-protecting-you-preventing-illegal-adult-content-on-our-network/ https://www.mastercard.com/news/perspectives/2021/protecting...
• ashtonkem 5y ago
  GE is one of my go to examples of the financialization of American capitalism. Pretty much every company once it crosses a certain size starts looking more like a bank than the goods and/or services company that existed before hand. This is both bad as a country, we need goods and services not GE financial operations, and often quite bad for the company as everything else ends up getting deprioritized and/or sold off. It’s also worth pointing out that this financial wing almost killed GE in 2008. Obviously consumer spending (e.g. washing machines) was going to drop during that time, but the financial wing of the company almost bankrupted them and ended up getting them removed from the Dow Jones Industrial Average.
  • Dokaz 5y ago
    Not just every company. In GDP or GVA calculations any region on the planet that gets prosperous by building goods, food, mining, whatever, sees a jump in real estate activity that sooner or later grows as large or larger than the sector that produced the growth. After that people coast whether in a company or in a county or a district or a state. Until competion either pushes them out of their comfort zone or crushes them.
• jeltz 5y ago
  And in Sweden we have IKEA and ICA (a local supermarket chain) who both have their own banks.
• JackFr 5y ago
  Don’t forget GMAC - General Motors Acceptance Corp. The joke back then was that GM was a perennial money loser and only existed as a loss leader, just so GMAC could make loans.
  • dasyatidprime 5y ago
    And GMAC Bank later became Ally Bank.
  • dharmab 5y ago
    I suspect a number of niche car and powersports brands exist in part as sales leads for financing.
  • skeeter2020 5y ago
    Today's Toyota isn't a money-loser, but it's more of a finance company than a automaker.
    • jeeeb 5y ago
      I was interested and fact checked this. Financial services are a small part of total revenue (about 1/12). They seem to be somewhat more profitable and make up about 1/4 of operating income. Fundamentally though Toyota is able to sell financial services because it sells cars. So Toyota I would say is very much a car company with a nice side hustle selling financial services. Source: https://global.toyota/pages/global_toyota/ir/financial-results/2022_1q_summary_en.pdf https://global.toyota/pages/global_toyota/ir/financial-resul... (See Supplement 2)
  • Spooky23 5y ago
    This is happening in software too. Office 365 is functions like car insurance for business activity. The products change pretty glacially, with most enhancements focused on increasing stickiness and upsell (PowerBI). I was talking to a customer, a tax policy guru about some of the challenges with corporate taxation. My suggestion to him was to implement an excise tax on O365 and GSuite, as those products are probably more reliable metrics of business activity than payroll and other measures. Plus, Microsoft is better at compliance than most tax authorities.
• travoc 5y ago
  Banking has always been about trust… something that Amazon will never have.
  • spicybright 5y ago
    People grumble about amazon yet rely on them for so many of their shopping needs anyways. If they make all of banking more convenient and streamlined like they do with shopping, a lot of people will jump on board.
  • delecti 5y ago
    I'm not sure why you think that, because Amazon is an incredibly trusted brand. And having worked there, in their advertising division no less, even I would be open to trusting them with financial services. I would prefer not to because I don't want to contribute to their domination of every market under the sun, but I'd pick Amazon over some traditional banks (namely Wells Fargo or BoA) if I were forced to make that decision.
    • travoc 5y ago
      Being trusted to deliver counterfeit goods that are easily returned is very different from being trusted to steward one’s life savings.
      • DangitBobby 5y ago
        I think you are vastly over-estimating how many people have this issue with Amazon. I can count on zero hands the number of counterfeit products I've gotten from Amazon. I hear people complain about being a customer of other online retailers, but I can't recall any conversations where someone complained about their experience with Amazon. You order it, it ships, it's the thing you ordered. Otherwise they refund you, or they ship you a new one and you keep the item they sent you be mistake.
        • tshaddox 5y ago
          Even all the people complaining about them in tech circles seem to either be delivering second-hand complaints, or are buying like huge amounts of SD cards and got one supposedly counterfeit batch one time. I am fairly convinced that the counterfeit goods thing is something that happens vanishingly rarely, probably similar to the people who get an expensive camera box containing nothing but a rock.
• beerandt 5y ago
  All manufacturers (or wholesalers or retailers) that grow big enough will run into the problem of: their potential market running out of customers that can pay cash up front, or easily obtain credit to purchase their product. Even "cash" accounts at things like trade businesses, where the account is more about convenience and workflow (and the professional getting paid only after the work is done) than it is credit or financing, are taking on some risk of non-payment at the end of the month in order to make business flow much faster and more smoothly, than it otherwise would. It's just a matter of what industries or businesses have the capital and the will, as well as the right risk models and opportunity costs to try and implement it all "in-house" or as a subsidiary.
• techsupporter 5y ago
  > Sears: had Allstate for insurance and Discover Card for credit. Unlike most "branded" credit-cards, Sears did its own underwriting for the Discover Card i.e. they owned the Greentrust bank This was a fairly common thing to do, as you point out, for department stores. As far as I'm aware, Target was the last holdout department store owning its own bank, Retailers (then Target) National Bank, through which it issued the RedCard and RedCard Visa, and sold to TDBank. Macy's had Department Stores National Bank, which it sold to Citi, and so on.
  • clairity 5y ago
    nordstrom also had its own bank but divested it to charles schwab in 2017. apparently its credit card assets went to td bank.
• agumonkey 5y ago
  SONY's banking branch was a big part of its revenue IIRC.
• MomoXenosaga 5y ago
  I see a lot of fintech startups but there is absolutely 0 money in providing basic bank accounts for paupers. It's why companies like Revolut and Bunq always end up doing what ordinary banks are doing: upselling. Shitty insurance and expensive creditcards is where the money is. Also transaction fees up the wazoo. Looking into it made me realize traditional banks aren't really evil- they are kept under tight government regulations that forces them to take any customer. Even the ones that make them no money. No I'll be sticking with €15 per year account.
  • resoluteteeth 5y ago
    > Looking into it made me realize traditional banks aren't really evil- they are kept under tight government regulations that forces them to take any customer. Even the ones that make them no money. No I'll be sticking with €15 per year account. Are banks really required to take all customers?
    • detaro 5y ago
      In the EU citizens have a right to a basic bank account that a bank has to give you (unless you were defrauding the bank etc), yes. Terms usually are not great, and details depend on the country.
      • arminiusreturns 5y ago
        In the US there is a not so hidden secret blacklist (actually a couple of them, different banks use different ones) where if you get on that blacklist the bank will refuse to open an account for you. Its an unaccountable list that unfairly prevents tons of people from needed banking services in this hyper-connected and hyper-financialized economy.
        • taurath 5y ago
          Also, a personal theory is that banks that provide high fee services for people in that black list (used to be called the chexx system or something similar) are much more likely to quickly put someone on it.
• cdolan 5y ago
  GE doesn’t own GE capital any longer. Turned out to be a crazy situation where they needed the cash flow but the assets were messed up because of valuations and insurance problems.
  • geodel 5y ago
    Indeed. And not just that. GE finance division turned out to be its undoing. Maybe Amazon which looks invincible today will fall to the perils of leverage in finance.