Google is preparing to roll out a “smart checking” account service early next year -- code-named Cache -- in partnership with Citigroup and the Stanford Federal Credit Union.
“What fancy new features will ‘smart checking’ include? Google isn’t sure. Neither are its partners,” write Stacy Cowley and Tara Siegel Bernard for The New York Times.
“The project … is envisioned as an extension of the Google Pay digital payments system. Its goal is to help banks’ customers ‘benefit from useful insights and budgeting tools,’ according to Craig Ewer, a Google spokesman. The focus will be mobile-first users, he said, but the specifics of what will be offered are still being worked out,” they add.
“Checking accounts could offer Google plenty of new consumer data, including how much people are paid, how much they spend and where and when they spend. Google told The Wall Street Journal it won't sell that user data to others, but it does plan on using whatever information it can mine from the accounts to partner with other companies for things like loyalty programs,” writes Stephen Gandel for CBS News.
“High-tech companies are experts at data exploitation and monetization," Dennis Kelleher, president of Better Markets, a financial reform advocacy organization, tells Gandel. “It's not clear that anyone other than high-tech companies would benefit from allowing commercial companies to provide those products and services, rather than financial companies.”
That said, the field is getting crowded. Facebook, for one, launched Facebook Pay earlier this week.
“It will be available across Facebook, Messenger, Instagram, and WhatsApp, and it’s designed to facilitate payments across Facebook’s popular social networks and apps. You’ll be able to use Facebook Pay to send money to friends, shop for goods, or even donate to fundraisers,” Tom Warren writes for The Verge.
Meanwhile, Facebook’s Libra digital currency project is encountering stiff resistance.
“While the starting points are different, both [Apple Card and Cache] are new consumer finance products linked to digital wallets embedded in respective Apple or Android phones. Whether it’s Apple Pay or Google Pay, the real battle will be to keep users locked into ever-growing payments ecosystems. Doing so will help the tech giants capture more of the fees and information now being given up to banks and fintech startups,” CNBC’s Hugh Son observes.
“The tie-ups between banking and technology have sometimes been fraught. Apple irked … Goldman Sachs Group Inc., by running ads that said the card was ‘designed by Apple, not a bank.’ Major financial companies dropped out of Facebook’s crypto project after a regulatory backlash,” Peter Rudegeair and Liz Hoffman write for The Wall Street Journal.
“Google’s approach seems designed to make allies, rather than enemies, in both camps. The financial institutions’ brands, not Google’s, will be front-and-center on the accounts, an executive told The Wall Street Journal. And Google will leave the financial plumbing and compliance to the banks -- activities it couldn’t do without a license anyway,” Rudegeair and Hoffman add.
“Everyone wants the payment to happen through their device, because if it’s effortless it will entrench you in their ecosystem,” Gerard du Toit, banking consultant at Bain, tells CNBC’s Son. “The information is valuable for Google in particular; if they are able to connect a specific purchase to advertising, there’s immense value in that.”
There’s also an immense probability of increased oversight and regulation from governments and agencies around the world.
“Google’s latest plans for financial services come as Alphabet, its parent company, is stepping further into healthcare, with cloud computing services for the U.S. health provider Ascension and the planned acquisition of fitness tracker pioneer Fitbit,” write Tim Bradshaw and Robert Armstrong for Financial Times.
“Many regulators in the U.S. and Europe believe that Google’s tactic of bundling new products with widely used services such as its search engine and Android smartphone software is anti-competitive. The European Commission has levied billions of dollars of antitrust fines against Google in recent years after investigations into its search, advertising and Android businesses,” they point out.
Indeed, “on Tuesday, the German chancellor, Angela Merkel, urged Europe to seize control of its data from Silicon Valley tech giants and establish ‘digital sovereignty’ instead of relying on Amazon, Microsoft and Google,” The Guardian’s Edward Helmore reports.
“So many companies have just outsourced all their data to U.S. companies,” Merkel said. “I’m not saying that’s bad in and of itself -- I just mean that the value-added products that come out of that, with the help of artificial intelligence, will create dependencies that I’m not sure are a good thing.”