Google Reportedly Plans To Offer Checking Accounts Next Year

Topline: While previous attempts from big tech companies like Facebook and Apple to get into financial services have met with obstacles and regulatory scrutiny, Google will become the latest Silicon Valley leader to push into the banking space, as it plans to offer checking accounts starting next year, the Wall Street Journal first reported.

  • Code-named Cache, the project is expected to launch in 2020 and will have its checking accounts run by Citigroup and a small credit union at Stanford University—where many Google employees reportedly still have bank accounts.
  • Google’s approach is different from those of competitors in several ways: It plans to brand its checking accounts with the financial institutions’ names, not its own, and will leave all of the financial compliance to the banks, although it is still unclear whether Google plans to charge fees on its accounts.
  • Consumers would be able to access their checking accounts using Google’s digital wallet, Google Pay, which is on track to have 100 million users globally in 2020, according to the Wall Street Journal’s report, which cited estimates from Juniper Research. 
  • Other big tech companies have all made forays into financial services—though none beside Google have attempted to offer checking accounts yet: Amazon has explored the idea, while Apple introduced a credit card last summer, and Facebook is working on its global digital currency Libra.
  • But the marriage of banking and big tech hasn’t always gone well: Apple’s credit card ran into multiple issues—including tensions with partner Goldman Sachs after Apple said it created the card without help from a bank, and Facebook’s Libra has lost major financial backers over regulatory concerns. 
  • Google’s move into checking accounts comes at a time when consumers have grown increasingly wary of providing big tech companies with personal data, just as regulators in Washington are initiating antitrust reviews investigating whether these companies have too much influence.

Crucial quote: Google wouldn’t sell customers’ financial data, Google executive Caesar Sengupta told the Wall Street Journal. “If we can help more people do more stuff in a digital way online, it’s good for the internet and good for us,” he said.

Key background: Big banks have been facing competition from technology upstarts, especially those geared toward Millennials and mobile-first consumers. These include money transfer services like Venmo, which is rolling out a own debit card. To carve out its own space in payment services, Google Pay will have to compete with similar apps from the likes of Apple, Samsung and Facebook—which earlier this week released a Facebook Pay service to use across its apps.

Tangent: According to a recent survey by consulting firm McKinsey & Co. cited in the Wall Street Journal report, 58% of consumers would trust financial products from Google—that scored better than Facebook (35%) and Apple (56%) but worse than Amazon (65%).

Further reading: Dawn Of The Neobank: The Fintechs Trying To Kill The Corner Bank (Jeff Kauflin)

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I am a New York—based reporter for Forbes, covering breaking news—with a focus on financial topics. Previously, I've reported at Money Magazine, The Villager NYC, and T

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