Google to offer personal banking accounts next year

November 14, 2019 13:17
After providing customers with the ability to make digital payments via Google Pay and Google Wallet, Google is now eyeing the consumer banking market. Photo: Bloomberg

Google is preparing to launch a personal checking account service in the United States as early as next year, following moves by some big tech rivals to increasingly expand into consumer finance.

The consumer checking accounts will be offered through the Google Pay app, initially in partnership with Citigroup and a small credit union at Stanford University.

Google spokesman Craig Ewer told Reuters that official details about the project, codenamed Cache, will be released within months.

“We’re exploring how we can partner with banks and credit unions in the U.S. 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,” Ewer said in a statement, referring by acronym to two US agencies that insure deposits.

Citi spokeswoman Liz Fogarty confirmed the banking group’s role in the project, saying the partnership has the potential to expand the reach and breadth of Citi’s customer base, while emphasizing that privacy and transparency “are, and will continue to be, critical priorities”, Reuters reports

Google's initiative comes as rivals Facebook, Apple, and Amazon are ramping up efforts in consumer finance, in a push to seek new sources of revenue.

Google said it has held initial talks with regulators about compliance issues related to the new checking accounts, amid growing fears of consumers, policymakers, and regulators that big tech companies are gathering too much information on consumers.

Byy partnering with traditional banks and leaning on their regulatory and financial know-how, Google hopes to push the project without engaging much with bank regulators.

With banks handling all financial and compliance activities related to the accounts, a Google executive told the Wall Street Journal: “Our approach is going to be to partner deeply with banks and the financial system. It may be the slightly longer path, but it’s more sustainable.”

On the business model of the new service, Google is still considering if there will be fees associated with the checking accounts.

But the Google executive emphasized that under the new project, Google will not sell account holders’ financial data, “just as it doesn’t share or sell Google Pay data,” nor does it share the data it amasses with advertisers or third parties.

On top of the basic financial services, Google also intends to offer product advantages for both consumers and banks, such as loyalty programs.

-- Contact us at [email protected]