Google is the most recent of the Silicon Valley tech giants that have made a move into the world of personal finance and banking. It was recently reported that Google will soon be offering checking accounts to individuals, and they could be available by next year. Google will be offering these accounts in partnership with banks and credit unions, and the project is being called “Cache.” The partner banks will handle the compliance and financial activities for the accounts.
Caesar Sengupta of Google spoke to reporters about the new venture. He pointed out that financial institutions will be more upfront to interact with customers than other similar programs being offered by other tech companies. Currently, Apple has a partnership with Goldman Sachs to offer its Apple Card credit account. In this venture, the financial institution is not visible to the customers.
Since the banking side of the operation is handled by the financial institutions, it begs the question of why tech companies stand to gain from a joint banking venture. One benefit for Google is the information that the tech giant can gain about banking customers that use its checking account product. This provides a detailed picture of people’s financial lives on a daily basis.
Google intends to offer other perks to customers and bank partners, such as loyalty programs. Google hasn’t decided if a service fee structure should be put in place. Sengupta reported that he believes that a no-fee policy could put Google’s checking accounts in a better competitive position.
The idea to offer checking accounts comes after the success that the company has enjoyed with its Google Pay and Google Wallet services. Other tech companies have followed suit by offering payment services. These companies include Apple and Facebook. The social media giant introduced a digital payment product earlier in 2019, and it is intending to roll out a digital currency that it has named “Libra.” The cryptocurrency is being developed in conjunction with other organizations.
Google is currently teaming up with Citigroup and Stanford Federal Credit Union. Google is motivated to attract digitally savvy and younger people who want to manage more of their daily activities with online apps. Sengupta revealed that the checking account platform will also provide a means to work with large sets of data to make them into products that add more value to the customer relationship.
Google’s representative assured reporters that they don’t use Google Pay data for advertising purposes, and it doesn’t share personal information from users of this service with advertisers. Google is cognizant that people might be wary of sharing checking account information with an information company. This could pose an extra challenge for the tech giant, and the current sociopolitical climate seems to be a further hindrance that will need to be overcome for the new checking account venture to succeed.