This year saw plenty of tech giants dabble in finance. Apple released its credit card, Facebook just launched a Venmo competitor and is trying to get its Libra cryptocurrency off the ground, and now Google is reportedly mulling offering a financial product of its own—checking accounts.
The project, according to a Wall Street Journal exclusive, is titled Cache and is expected to launch sometime in 2020. Citigroup and Stanford Federal Credit Union were named as partners—as in the financial institutions that would handle the logistics. It makes sense it would partner with a big bank, but as for why Google is teaming up with a relatively unknown credit union? Apparently many Google employees bank there.
Details about Google’s checking accounts were somewhat thin. The WSJ cites Caesar Sengupta, a Google executive, as saying the checking accounts were a way to bring value to consumers, banks, and merchants—possibly via loyalty programs. Sengupta also said Google itself wouldn’t sell anyone’s financial data, emphasizing that Google Pay data isn’t used for advertising purposes and that data isn’t shared with advertisers. The report also states Google hasn’t decided whether Cache checking accounts would charge any fees—a nasty ploy that banks sometimes use to penalize customers who keep low balances. Another interesting note is that customers would have to access their accounts via the Google Pay app.
Citigroup confirmed to Gizmodo that it was working with Google on checking accounts, but declined to provide additional details at this time. Meanwhile, a source familiar with Google’s plans also confirmed the accuracy of the WSJ report.
It’s clear what Google’s incentives are here: Data and hooking users further into its services. Even if it says it won’t sell financial data, use that data for advertising, or share it with third-parties, there’s nothing stopping Google from using that data to paint a hyper-detailed picture of you. Your checking account holds a lot of sensitive information about you—everything from how much you make to what bills you pay and what you choose to spend on. Just because Google—and its partners—may promise other entities won’t have access to your information, there’s no reason to believe they won’t use your data internally. (It’s also the same sort of tricky wording Goldman Sachs and Apple use regarding the Apple Card.)
The Google checking account will also likely function as a de facto gateway drug for Google Pay. Again, the comparison to the Apple Card here is apt. By forcing users to use the Wallet app and giving them higher cashback bonuses via Apple Pay, the Apple Card cements users into Apple’s ecosystem. While we don’t currently know what sort of perks Google might add to its checking accounts, forcing you to use the Google Pay app to even access it is a shrewd way of funneling users into its service—and keeping them there.
It shouldn’t come as a surprise that tech giants are turning to financial services—the data jackpot is too tempting to ignore. But it’s a strategic move for big banks too as consumers wise up to alternative banking options. Apps like Venmo and Cash continue to eat away at services that used to belong solely to traditional banks. Meanwhile, there’s no shortage of online checking accounts that have fewer fees and higher interest rates, such as Simple or Ally. For Citigroup, teaming up with Google presents a chance to gain access to a younger userbase. Then, once they’ve got that access, it’s exponentially easier to target those users for other products like personal loans, credit cards, and mortgages.
That pretty much checks out with a statement Citigroup sent to Gizmodo over email. “We are pleased to explore providing checking accounts nationwide through Google Pay,” says Drew Benson, a spokesperson for Citigroup. “This agreement has the potential to expand the reach and breadth of our customer base, while complementing our continued investments in digital, particularly our market leading Citi Mobile app. As we do, privacy and transparence are, and will continue to be, critical priorities.”
Without more details, it’s hard to say how a Google checking account will fare. That said, it seems unlikely that it’ll all be smooth sailing based on how other tech-affiliated financial products are doing. After strong reservations from regulators, Facebook’s Libra cryptocurrency is nearly dead on arrival after multiple, big-name partners dropped out of the project. Likewise, just a few months after launch, the Apple Card has faced numerous complaints regarding Goldman Sachs’ black box algorithm for determining credit limits. Google itself is the subject of a Department of Justice antitrust investigation, and it seems unlikely that a blatant grab at consumer financial data will go unnoticed.
At any rate, it’s always good to remember that despite the flowery language about “improving consumers’ lives”, the conveniences that tech giants offer often come at a cost. Sure, Google might offer a good checking account, and it might be really easy to use on your smartphone. But the data, privacy, and freedoms you give up in return are arguably of far greater value.
Update, 11/13/2019, 14:57: Added quote from Citigroup.