Google moves into banking, taking on Revolut and Monzo in a digital battle for customers
Google joins Amazon, Apple, Facebook and Uber, among other tech companies, to offer banking or credit services, as these companies try to push their brands deeper into our digital lives.
Google is the latest of the huge technology firms to make a move into consumer banking. According to the WSJ and Investopedia, the online giant will soon offer banking accounts under a project codenamed “Cache,” which partners Google with Citigroup and a credit union at Stanford University.
Google customers can already make payments using a linked credit card on Android mobile phones with the Google Pay app – on track to having almost 100 million users by 2020. The payments app called Google Wallet was later merged into Google Pay. Customers using Cache system would access their account through Google Pay.
Adding personal payments and bill payment services with a global bank like Citi is a fast way to scale customers and eventually offer them other financial services like loans and mortgages. The proposal is likely to spark fears that already ultra-powerful tech companies are now seeking to profit from families’ financial data too.
Caesar Sengupta from Google declared to the Wall Street Journal that the company will leave the process of handling money in current account apps to traditional banks, and therefore it will not require a banking licence since it is likely to avoid heavy regulation: “Our approach is going to be to partner deeply with banks and the financial system. It may be the slightly longer path, but it’s more sustainable.”
The push into financial services could make Google a new rival to the challenger banking apps that have emerged in recent years, many of which rely on convenience services such as peer-to-peer payments, money management services or cheap transfers.
Monzo has declared to have signed up more than 2 million users to its digital banking app, while Revolut claims more than 7 million.
Accenture analyst Tom Merry said that digital banks may face regulatory hurdles as they grow in size from small challenger banks to businesses with millions of customers: “As they get bigger, that regulatory burden increases and they’ll need to be able to absorb that increased cost”.
According to a recent report from Accenture (NYSE: ACN) digital-only banks are expected to triple the size of their customer base within 12 months to more than 35 million people, based on current growth rates. In the first 6 months of 2019 alone, 5 million people opened an account with a digital-only bank.
Digital-only banks are accelerating customer acquisition at a current growth rate of 170% as they launch new products, widen their customer base beyond millennials and expand into new markets.