Google plans to partner with financial institutions such as Citigroup while collaborating with banks and credit unions to offer checking accounts.
Google is set to offer checking accounts as from next year under their project Cache. The checking accounts will be in the financial institutions’ names, and not Google, unlike other tech companies, has handled their financial products. This is a rather bold move for the tech company to offer its consumers banking options.
This move is highly similar to the previous attempts by Facebook and Apple to join the banking space, which were countered by various obstacles.
Big Tech Companies Woes in the Banking Sector
Unfortunately, it is reported that most people are still skeptical about trusting these big tech companies as they are highly doubtful that their personal information would be kept safe. As a matter of fact, just like with Libra, Facebook’s stable coin, ever since it was announced to be launched, debate after debate has ensued, mostly targeting Facebook’s ability to keep consumer’s personal information secure and regulatory issues. Thus this far, Facebook has since announced a new system of payments in its social media and messaging platforms.
In the same note, earlier this year, Apple, in partnership with Goldman Sachs, launched a credit card for its iPhone users. However, multiple issues have come up since then. Apparently, Apple claimed to have created the card without a bank, which has made their relationship with Goldman quite tense. Moreover, the algorithm that the card was set to determine the customer’s credit limit is also said to be biased towards men.
Google Says It’s All in Good Faith
On the bright side, Caesar Sengupta, the executive at Google, stated that they are not after selling customers’ personal information. Instead, he noted that Google is after assisting people to do more in a digital way, which will be good for both the internet and for the people.
a Google spokesman Stated:
“We’re exploring how we can partner with banks and credit unions in the US 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.”
However, Caesar did point out that the challenge will be convincing the public to give them access to their personal details, which is a sensitive part of their lives, something Facebook is battling with.
For a long time, banks have had fears of small tech startups bringing in competition. However, it just turns out that the large tech companies seem to be the bigger threat. These big tech companies, the likes of Google and Amazon, not to mention Facebook, have established relationships with millions of consumers who may act as their base in joining the banking space.
Senator Mark Warner expressed his concern in the engagement of these large tech companies in the banking field. His main concern is the fact that there is no set of regulatory rules. He echoed that once these tech companies are allowed into the field, removing them will be practically impossible.