Code-named Cache, the accounts will be handled by Citigroup and a credit union at Stanford University. The branding will reflect the financial institutions and not Google.
“Our approach is going to be to partner deeply with banks and the financial system,” Google VP of Product Management Caesar Sengupta told WSJ. “It may be the slightly longer path, but it’s more sustainable.”
Google will not sell account holders’ financial data, Sengupta said, just as it doesn’t share or sell Google Pay data.
A recent McKinsey & Co. survey indicated that 58 percent of respondents said they would trust financial products from Google. That trust factor was higher than Apple and Facebook, but lower than Amazon.
“If we can help more people do more stuff in a digital way online, it’s good for the internet and good for us,” Sengupta said.
Google is still mulling whether there will be fees associated with the checking accounts, he added.
Technology firms are already proving to be big competitors to traditional banks, with companies like Venmo and Cash App launching debit cards. The delicate balance between bank-FinTech competition and collaboration continues to teeter in the U.S. In the absence of open banking regulations, FinTechs continue to enter the market, collaborating with bank partners to offer their own financial services, which often compete directly with other FIs.
According to research from Accenture, FinTech startups threaten to take a $280 billion piece of banks’ payment revenue pie by 2025 – worth 15 percent. Analysts found that FinTechs’ ability to offer free transaction services could take the greatest portion of banks’ payment revenues, followed by instant payments and app-based virtual wallet services.