Google is the latest of the Big techs to step into Financial services
The search engine giant is gearing up to offer checking accounts to users starting next year
The legacy financial system spearheaded by the big banks has seen its hegemony challenged in more ways than one by the emerging Fintech startups in the past decade. These Fintechs have started to redefine the digital landscape by not only providing customers with innovative solutions enabled by technology but by providing financial access to the unbanked. Taking a page from their book, the Big techs have accelerated their efforts to step into the financial space.
Except for Microsoft, all the FAAMGs have either offered some sort of financial products or shown their intent to do so. The latest company gearing up to offer banking accounts to its users is the search engine giant Google. According to a report by the Wall Street Journal, Google will partner with Citigroup and Stanford Federal Credit Union initially to offer checking accounts under the project “Cache.”
Amazon had reportedly been in talks with JPMorgan Chase last year to offer a similar service. Apple recently expanded in the credit market beyond ‘Apple Pay’ with the launch of the ‘Apple Card’ in collaboration with Goldman Sachs. Facebook has also unveiled a digital payment product dubbed as ‘Facebook Pay’ offering convenient, secure and consistent payment experiences across all the social media giant’s platforms (Messenger, Instagram & WhatsApp).
This is perhaps a desperate attempt by FB to enter the digital payments space after its digital currency Libra got stonewalled by regulators. Apple’s offering has run into its own issues — it’s claim that it created the Apple card without the help of its banking partner caused some friction. Apart from that, complaints regarding the biased algorithm towards men to determine customers’ credit limits have also surfaced is causing headaches.
It’s not just the tech giants anymore with their entry into the financial services — Uber recently introduced ‘Uber Money’ in collaboration with a Fintech company to offer a digital wallet & upgrading of its debit and credit cards. While all these endeavors are native products to these companies, Google’s plans sound much less ambitious. It wants to put its banking partners much more front-and-center for its customers.
One may ask then… What’s the use of offering these checking accounts? Google already offers Google Pay & Google Wallet which have some extended features like exchanging money between users. Seems like Google is much more interested in getting insights into customers’ behavior in their daily financial life.
After all, data is the new oil in the information age. It is also looking into offering value-added services like loyalty programs & maybe offer fee-less banking accounts. More importantly, Google probably doesn’t want to entangle itself in the regulatory quagmire like its contemporaries.
However, one challenge that remains for Google, much like the other Big techs is to convince the consumers that their data is safe with these technology companies considering their very questionable privacy record.
On the other hand, the traditional banking sector which is already reeling with the fierce competition from the small & nimble Fintechs has perhaps bigger worries in the shape of the Big Tech companies entering the arena, armed with cutting edge technology & huge user bases.