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Google is the latest tech giant planning a move into the banking sector, according to a new Wall Street Journal report. A partnership between Google and financial institutions would allow consumers to open checking accounts linked to Google Pay, the company’s digital wallet, sometime in 2020.
The report includes the announcement of initial partnerships with Citigroup and Stanford Federal Credit Union, a smaller lender near Google headquarters. This news continues the trend of tech giants outside the realm of finance moving into the financial services space. Earlier this year, Apple partnered with Goldman Sachs to produce the Apple Card; Facebook (for a time) had partnerships with major payment processors for its proposed cryptocurrency, Libra; and Amazon has expressed interest in partnering with financial institutions on checking accounts.
Even though other tech companies have been eyeing the financial sector, Google’s move raises fresh questions about consumer trust. Read on to learn about Google’s partnership with financial institutions and what it could mean for you.
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Google’s new project, code-named “Cache,” is designed to be a digital-first experience. Consumers would access their checking accounts through Google Pay, though it’s currently unclear if there would be a way to access accounts through the participating financial institutions.
Despite using Google technology, the accounts will include the partner institutions’ branding. Because it operates outside of the financial sector, Google will also rely on those its banking partners to handle the necessary regulatory and compliance work with regulators, according to the WSJ report.
We don’t know all of the details around why Google wants to get into banking now, or what its banking partners hope to gain from working with Google.
However, checking accounts can offer particularly rich consumer data. By having people open checking accounts, the Journal suggests, Google could gain more access to key consumer information, such as how much money people deposit, the bills they pay and how they shop.
As for Citigroup, traditional banks now face increased competition from fintech companies (tech companies already operating within the financial sector), as well as other traditional banks. Citigroup, and other financial institutions, could theoretically reach a lot more consumers by partnering with a tech giant outside of the industry, like Google.
It’s unclear when the Cache project will be available to the general public, though the target date is sometime in 2020. No matter when the launch is though, Google could face hurdles before it can start offering checking accounts.
First, federal regulators are already investigating whether Google’s access to consumer data from products like its search engine and email app has given it an unfair competitive advantage. It’s possible that regulators could similarly scrutinize Google’s new banking plans.
Second, there’s no guarantee that the general public will trust its financial information with a company that’s already able to access so much other personal data. Given recent high-profile data breaches from banks like Capital One and tech companies like Yahoo, many consumers may need to be convinced to let one company have even more access to their information.