Silicon Valley continues to invade your wallet.
Google plans to offer checking accounts to customers starting next year, a source familiar with Google’s plans told CNN Business. Google is partnering with Citigroup and a credit union at Stanford University for the initiative. The Wall Street Journal first reported Google’s entry into checking accounts.
“We’re exploring how we can partner with banks and credit unions in the US to offer smart checking accounts through Google Pay, helping their customers benefit from useful insights and budgeting tools, while keeping their money in an FDIC or NCUA-insured account,” a company spokesperson said.
But Google doesn’t plan to take center stage on the checking accounts. Instead, the financial institutions’ brands will be put on the accounts and banks will be responsible for the financial plumbing and compliance. Partner banks and credit unions will offer these smart checking accounts through Google Pay. Google also hasn’t decided whether the accounts would charge fees.
The push into checking accounts is the latest instance of a Big Tech company moving into the financial services space. Amazon also wants to introduce checking accounts for customers. Facebook announced its Libra cryptocurrency project earlier this year. And Apple has teamed up with Goldman Sachs to launch a credit card, while its Apple Pay service has become a go-to payment method for many iPhone customers.
Google is attempting to deepen its relationship with consumers by entering into finance, Dan Ives, managing director of equity research at Wedbush Securities, told CNN Business.
“The company has an unmatched position within the consumer life cycle and now they’re trying to leverage where they are,” Ives said.
Google already offers smart home devices like Nest and Google Assistant and just entered into health and wellness world with its planned acquisition of Fitbit.
“The missing piece is banking,” said Ives.
Ives said Google’s initiative probably won’t cause big banks any concern for now, but Big Tech’s ongoing expansion of its financial footprint will likely pose a competitive threat in the future — especially as it shows no signs of letting up.
“This is just the tip of the spear in terms of where [tech giants are] going,” said Ives.
Lawmakers in Washington, who are already investigating the dominance of big tech companies, will probably review Google’s move closely.
Google’s effort could draw scrutiny given Washington’s distaste for both Big Tech and big banks, Jaret Seiberg, an analyst at Cowen and Company, said in an analyst note.
“We have trouble seeing how combining the two is going to produce an outcome that either Democrats or Republicans will embrace,” Seiberg said.