Summary – Google is not becoming a bank, but rather enabling:
- New integrated tools that will provide the BEST mobile bank experience
- Instant account opening
- Consumer incentives that will unlock the power of data (w/ consumer’s consent)
- New predictive analytics, recommendations, alerts, reminders, coupons, offers and engagement
Over last 6 months or so we have seen several Press Releases relating to Google’s bank partnerships:
- Google Pay Partners – Mobile Payments Today – Aug 3
“We had confirmed earlier that we are exploring how we can partner with banks and credit unions in the U.S. to offer digital bank 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,” stated the release.
- Google – Not about becoming a bank – PYMT.Com – Nov 2019
Smart, according to Google, because it will provide its checking accountholders with money management tips to optimize and manage the funds in those accounts – funds linked to payments and identity credentials that consumers can use to buy things, pay bills and send money to others in and outside the Google ecosystem.
- Google / BBVA “collaboration” – Aug 3
BBVA USA President and CEO Javier Rodríguez Soler. “This collaboration with Google is fully aligned with this effort – even more so in today’s world where the ability to conduct your financial life in a digital manner, from account opening to transacting to understanding financial health, is an imperative.”
- Google / Citi – Nov 13 2019
Customers can access their accounts through the company’s Google Pay app, the person said.
- Google Card as part of Smart Checking – Apr 2020
- Google to offer Checking Accounts (Tech Crunch) – Nov 2019
- Google Pay Case Study (Google document) – Nov 2019 (must read)
Perspective – Industry Q&A as Baseline
- Does Google want to be a bank? Nope.. not ever. Google wants to support great customer experiences on Android. Google also has consistently worked to partner with Banks.. for the last 10 years. Their syndicated model stands in stark contrast to Apple (15bps revenue share, and launch of competing product). See blog.
- Does Google want to build its own payment network? Nope.. not likely. While google has had tremendous success in India with Tez (now GooglePay) they ride the rails of RTP services as a payment facilitator (in India), Europe’s SEPA and PSD2 allows for similar roles, but Google probably recognizes that established markets have existing infrastructure. Google will support whatever consumers want to pay with. Bank integration however is a key to enable RTP (both in authentication of customer and account ownership). As I’ve stated previously in my TCH blogs, the banks are seeking to enable a counter to V/MA particularly in debit.
- Is Google Pay taking off in the US (at POS)? No. Apple accounts for roughly 85% of all contactless POS transactions, Samsung 6-8% and Google around 4%. GooglePay in the US is largely a failure
- Does Google care about identity? Absolutely it is the core around which they are building a platform for a new mobile economy. It is also the core for value orchestration.
- Does Google need bank data? YES. Payment data has been my business for last 7 yrs. GDPR in EU and various state laws (ex CCPA in California) have thrown a wrench into Google’s data stream. As discussed in Payment Data Blog (Aug 2018), Google, Facebook and others were getting direct feeds of real time payment data AND SKU information from all the top retailers. New rules prohibit this kind of data sharing without consumer permission. Banks (AND MERCHANTS) should know that Bank data integration is necessary for Google to “close the loop” on its data engine. Banks are the directory of commerce, they know where a consumer shops (but not what is purchased), retailers know whats purchased but not WHO the customer is. Google will be able to tie all of this information together.. and they do today through partners like LiveRamp/Acxiom. This may present a bigger problem for merchants as Google will have pricing insight at SKU level across retailers.
- Is Google bank Friendly? Yep. Of course in comparison to Apple everyone is bank friendly.. but Banks are a key customer of Google Advertising, Google Cloud and Google Pay. Google wants to work with banks..
- Does Google want to understand consumer intent? Yep.. and bank transactions can help Google better understand (and predict behaviors). For example, if you bought an airline ticket, and a bank integration provides it.. google will be able to offer you best hotel deals at your destination based upon our preferences. While Google states that project Cache data may not be used for advertising, it could be used for customer experience and recommendations. (See Google Now)
- Could Google build the “BEST” bank interface and financial management UI? Yep. Predictive analytics, detail spending (at SKU level), financial “advice”, Integrated UI, Integrated payments, Alerts, Fraud and identity management, financial education (youtube), …
- What assets could Google bring to banks (and consumers) as incentive for Cache? Discounts, Coupons, Loyalty, Merchant based offers, free internet (Google FI), youtube premium, google devices, .. you get the picture. Google has the assets to incent consumer, merchant and bank participation.
Project Cache – My Guess
THE most bank friendly partner offering that will enable any bank to compete at parity with the NeoBanks.
- Instant account opening with any participating bank
- Integrated Android UI with best in class budgeting and planning tools
- Integrated “bank assistant” within Google Now to allow for planning and reminders of bills, trips, and other services
- Integrated merchant loyalty, discounts and coupons
- Consumer consent surrounding Google Pay, Use of Data
- Common Google Pay card that works across all account types (remake of the original Google Wallet/TXVIA card)
- Consumer “data control center” where consumers receive fraud alerts, bureau alerts, and data compromises that may impact them
- Revenue share with participating banks
- Google service package – Consumer benefits (listed above)
Google will unlock the power of 4 key data sets (with the consumer’s consent).
- Bank Data (purchases, merchants, affinity, balance, deposits, withdrawls, bill payment/due dates, travel destinations, cards used, identity, …)
- Merchant Data (items purchased, amount, brand affinities)
- Consumer/Social Data (Search, Intent, Calendar, eMail, Google now, contacts, …etc)
- 3rd Party Data (Credit Bureaus, Fraud Alerts, Shopping/Pricing, …etc)