According to a recent announcement by Google, the search engine giant will start providing financial services to its customers. This news came after payment companies left the Facebook Libra association en masse last month, and the unveiling of Facebook Pay this week. It will be recalled that Apple’s controversial collaboration with Goldman Sach led to the launch of Apple Card in August.
This scheme that Google called the “Cache” project will see the IT giant partnering with some credit unions and selected banks. Citigroup and a Stanford University-based credit union are the first to be confirmed as partners to the project. Others will be announced in due course.
In a statement released by Liz Fogarty, the spokesperson of Citigroup, the agreement has the potential of expanding the customer base of the banking giant. The President and CEO of Stanford Federal Credit Union also commented that the deal would help the company to provide services that align with the expectation of customers.
At present, the only information available to the press is the disclosure of some partnerships. Besides, Craig Ewer, who is the spokesperson of Google, also revealed that the checking account would be “smart” in certain perspectives. The disclosure did not go into details regarding the target audience or if the account will attract charges. The audience is especially crucial to this project, given the antecedence of poor adoption of Google Pay in the US.
The evolution that Google intends to introduce to the banking sector is equally uncertain. However, Ewer hinted that collaboration with financial institutions shall entail the use of Google Pay to provide smart checking accounts to customers. He said that the benefits to customers shall include access to valuable insights and budgeting tools with customer funds secured by FDIC or NCUA insurance. –
However, the nature of the so-called “insights” and “tools” remains unclear. It might even attract another outcry, given the recent criticism over the company’s controversial use of user data. The activities of Google recently came under radar when it was revealed that it secretly secured the medical information of 50 million Americans from healthcare institutions. The company was also indicted for deploying tactics for tweaking search engine result pages. Other accusations include possible bias, and readiness to alter search results related to at least one of its top advertisers.
Senator Mark Warner (D) expressed reservations while answering a question put to him by CNBC. The senator said that the antecedence of giant platform companies questions their commitment to transparency and protection of user data. Warner believes that there is a need for more regulations, given the number of tech companies intending to start offering financial services. He said once these companies enter the finance industry, getting them out will become difficult. It will be recalled that warner owns a tech firm before venturing into politics.
Warner and many others had made conservative remarks at the backdrop of Mark Zuckerberg’s testimony at the US Congress a month ago. The Facebook CEO described the financial infrastructure of the US as outdated while testifying before congress. The value that these tech giants are bringing to the table will tell if the present financial system has become old-fashioned. We will have to wait and see.
