A small Federal Credit Union and mammoth CITI will be the first to partner with Google to open checking accounts for customers through Google Pay.
Stanford Federal Credit Union’s president and chief executive was quite direct in explaining how critical she feels partnerships like this are for credit unions. She said the deal is “critical to remaining relevant and meeting consumer expectations.”
The initiative is not the first of its kind as Goldman Sachs is working with Apple, and other major banks have teamed up not only with companies like Facebook, but also Walmart and Amazon to offer products appealing to consumers.
While banks have long partnered with companies outside the industry to increase assets and expand their customer base, these initiatives are bigger and more strategic to the future of the industry and can potentially be another threat to community banks.
Cache, the project name, hits the digital consumer finance area where there will continue to be a fight for market share. Digital payment apps, loans, and the investment advisor space are all areas where banks are fighting for consumer attention.
It will continue to be a major concern for lawmakers, who will struggle to keep up with digital transformation that effects consumers. One of the biggest issues that is of concern is rules on sharing consumer data. Banks have sensitive information on customers that many consumer brands covet. Bank accounts through Google Pay certainly raises more questions on the power of companies with global dominance.
Google has mentioned that they are already in talks with regulators in order to make sure that they will not only be compliant of present laws, but also for anticipated regulations in the future. Citi commented on the privacy issue in a statement through Liz Fogarty. She stated, “This agreement has the potential to expand the reach and breadth of our customer base. Privacy and transparency are, and will continue to be, critical priorities.”
It will be interesting to watch if and what type of consumers will respond to checking accounts in this form and what effect it will have on the transformation of the banking industry.