Google will soon offer its consumers with checking accounts, will become the latest ‘Silicon Valley’ height weight to explore the financial domain.
The project with code-named "Cache" is likely to unveil next year with accounts active by Citigroup Inc, and a credit union at Standford University, a small leader in the backyard of Google.
Big technology companies consider financial services as a means to get closer to consumers and extract valuable data. Apple Inc. has already introduced a credit card this summer and Amazon.com has discussed it with banks regarding offering checking accounts. Meanwhile, Facebook Inc. is working on the digital currency with hopes to upend global payments. All their desire could challenge obligatory financial-services firms, which has fears of losing their customers and primacy. They are further expected to tend a reply in Washington, where regulators are probing whether large tech companies have too much clout.
The tie-ups between technology and banking have sometimes been frantic. Apple irritated with its credit card partner - Goldman Sachs Group Inc., by running ads that read that the credit card was “designed by Apple, not a bank.” After a regulatory backlash, major financial organizations have also dropped out of the crypto project, unveiled by Facebook.
Its start seems outlined to make allies, rather than foes, in both camps. The financial organization’s brands, not Google, will be front as well as center on the accounts, an executive informed sources. Hence, Google will leave the fiscal plumbing and compliance with the banks - activities it couldn’t explore without a license.
Google Executive Caesar Sengupta was quoted in an interview that “our approach is going to be to partner deeply with banks and the financial system,” adding, “It may be the slightly longer path, but its more sustainable.”
Google is setting its vision a bit low. The checking accounts are a commoditized product, and people do not switch frequently. But they will contain a treasure trove of data, including how much fund people make, where they usually shop and what bills they pay off.
Mr. Sengupta stated that the tech giant wanted to bring value to consumers, merchants, and banks, with services that comprise of loyalty programs, but it would not share its checking-account user’s financial information. Google assured that it does not use data of Google Pay for advertising purposes and not even share it with advertisers.
Mr. Sengupta continued, “If we can help more people do more stuff in a digital way online, it’s good for the internet and good for us.”
Google has not yet decided whether it would charge for its checking accounts or not, added Mr. Sengupta. Sometimes banks even charge fees to a few customers, who carry limited balanced or often use their debit cards.
Meanwhile, Google Pay is on a trail to have around 100 million users globally in 2020, compared to 39 million in the last year, report sources. Apple Pay had nearly 140 million users in 2018.
Banks are trying to differentiate when to work with tech firms and when to compete against them. Both Standford Federal Credit Union and Citigroup - other partners of Google on the Cache Project, could introduce deposits and develop a relationship with younger, tech-savvy savers, who might need a mortgage or a credit card.
The Head of Citigroup’s American Consumer Bank Anand Selva has said that digital partnerships like the one developed with Google will allow the bank to expand beyond its domain and mortar network. “We have to be where our customers are,” he noted.
Caesar Sengupta has moved from Delhi to attend graduate school at Standford University in the late 1990s, disclosed that he opened his first bank account at the Standford Credit Union and most employees of Google still bank there.
Mr. Sengupta further said that the tech giant is open to add more banks in the future.