Google intends to offer checking accounts to customers as from next year. Google has partnered with Citigroup and a credit union at Stanford University for the initiative. This Google entry into checking accounts was first released by The Wall Street Journal
The company’s spokesperson said “We’re exploring how we can partner with banks and credit unions in the US to offer smart checking accounts through Google Pay, helping their customers benefit from useful insights and budgeting tools, while keeping their money in an FDIC or NCUA-insured account.’’
Google however, doesn’t plan to take center stage on the checking accounts. Instead, the financial institutions’ brands will be put on the accounts and banks will be responsible for the financial plumbing and compliance. Partner banks and credit unions will offer these smart checking accounts through Google Pay. Google also hasn’t decided whether the accounts would charge fees.
The impulse by google into checking accounts is the latest instance of a Big Tech company moving into the financial services space. Amazon is also trying to introduce checking accounts for customers while Facebook announced its Libra cryptocurrency project earlier this year. Meanwhile, Apple has teamed up with Goldman Sachs to launch a credit card, not to mention the fact that its Apple Pay service has become a go-to payment method for many iPhone customers.
Dan Ives, the managing director of equity research at Wedbush Securities told CNN that Google is trying to expand their relationship with it users by entering into finance. “The company has an unmatched position within the consumer life cycle and now they’re trying to leverage where they are,” Ives explained..
Google already offers smart home devices like Nest and Google Assistant and just entered into health and wellness world with its planned acquisition of Fitbit. “The missing piece is banking,” said Ives.
Ives also cited that, this idea should not cause panic among banks for the moment, but Big Tech’s current increase of its financial trail will likely pose a reasonable threat in the future — especially as it shows no evidence of letting up. “This is just the tip of the spear in terms of where [tech giants are] going,” says Ives. Lawmakers in Washington, who are already studying the control of big tech companies, will probably review Google’s move carefully.
Google’s effort could draw scrutiny given Washington’s dislike for both Big Tech and big banks, Jaret Seiberg, an analyst at Cowen and Company, said in an analyst note.”We have trouble seeing how combining the two is going to produce an outcome that either Democrats or Republicans will embrace,” Seiberg cited.
