Google to Offer Checking Accounts By 2020

Alphabet Inc’s Google division has ambitious plans to enter the consumer banking space by 2020. Codenamed Cache, the project plans to offer checking accounts.

According to news reports, the checking services will be offered through the Google Pay app but the accounts will be held by Citigroup and a small credit union company at Stanford University. Google is the latest of the Silicon Valley heavy-weights like Facebook, Apple, and Amazon to expand its financial services in the consumer banking space.

 The tech companies are already offering digital payment services with small forays into brokerage, loans, and digital currencies to expand their revenue sources, and continue to be an insidious part of their consumers’ lives.

It is seen, by some, as another opportunity to gather valuable data by these tech companies.

A Google executive has said that the company aims to partner deeply with banks and other financial service providers to reach their consumers.

 For Citigroup also it will be an advantageous collaboration as its branch network is supposed to be smaller compared to other banks. This way it will be able to expand its consumer base without the additional cost of building a physical presence.

Apple introduced a credit card this summer in collaboration with Goldman Sachs. Facebook has launched a digital currency named Libra backed by almost 16 companies, including Visa, Mastercard, Lyft, and more. Though the currency is facing some rough weather now, and it may take some time for it to reach the consumers.

Amazon is already into talks with various banks to form tie-ups for consumer banking services. JP Morgan Chase, American Express are some of the banks teaming up with Amazon. Walmart, Delta Air Lines, and Home Depot offer similar digital payment services in collaboration with payment companies and banks like Citigroup and Green Dot.

Google, Apple, Facebook, and Amazon already offer digital wallet services to their subscribers.  Google’s digital wallet, Google Pay, will reach 100 million subscribers by 2020, according to projections made by Juniper Research. Apple Pay is projected to raise its user base from 140 million in 2018 to 225 million in 2020. Another new player, Samsung Pay, is also expected to reach 100 million users in 2020.

Facebook, besides its Libra cryptocurrency, has rolled out Facebook Pay through its Messenger services and plans to expand it to WhatsApp and Instagram users. The company has partnered with PayPal and Stripe to process the payments.

Consumer surveys have revealed that the subscribers of these services have faith in these services offered by the tech companies. A survey by consulting firm McKinsey & Co. has revealed that 58 percent of the respondents trusted the financial services and products offered by Google.

Amazon scored better, with 64 percent of the surveyed people saying they would use their financial services. Apple was marginally behind Google with 56 percent in trust. Facebook scored the least at just 31 percent.

The tech behemoths, on their part, are promising full security and all efforts to prevent data fraud.

The United States government has shown concern about the growing influence and monopoly of these giant companies. There are reservations about their expansion into financial services considering their poor past record on data fraud and privacy issues. The lawmakers are also concerned about the regulations and laws that need to be put in place to regulate these services and the companies.

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Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

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