Google to Expand its Financial Services with Checking Accounts
More and more tech companies are starting to offer financial services in addition to their mainstream products and services. Apple, for instance, has tried to get people to use their iPhones to make payments with Apple Pay, and the company also recently released its own credit card by partnering with Goldman Sachs. Samsung, too, includes built-in mobile payment functionality in their Galaxy line of smartphones with Samsung Pay, which competes with Google Pay, available on Android devices. These services use phones’ built-in NFC chips to communicate with credit card terminals in order to streamline the payment process and offer rewards to customers. Now, The Wall Street Journal reports that Google is partnering with Citigroup and a small credit union at Stanford to offer checking accounts within the Google Pay app in an effort to more deeply integrate their customers’ finances into the Android platform.
Caesar Sengupta, a Google executive, told the Wall Street Journal that the project is meant to “help more people do more stuff in a digital way online.” The accounts will be branded as coming from Citigroup, but will be deeply integrated into Google’s services. Part of the reason Google might be interested in offering a checking account is the fact that these accounts contain a tremendous amount of data about consumers’ spending habits, and Google is known to collect as much data on their customers as they can. While this data is valuable to the tech giant, however, Google says that they won’t sell financial data to advertisers, and they do not currently use Google Pay data for this purpose. Amazon, another Big Tech staple, is also looking into offering checking accounts.
As Google is a newcomer to the financial services space, how they handle their customers’ banking data, in addition to the tremendous amount of other data the company collects, is sure to be closely scrutinized by both privacy advocates and the general public.
Expanding into financial services is something of a trend for big tech companies whose businesses rely on collecting consumer data. Facebook, for instance, has been pushing its cryptocurrency, Libra, which is still in development but intended to compete with Bitcoin and other virtual currencies, and the company recently announced Facebook Pay, meant to allow Facebook users to easily send money. The Apple Card, meanwhile, comes with its own iPhone app that integrates with the Wallet app with all of the polish expected from an Apple product. Both of these companies, however, have faced serious problems as a result of entering into the business of consumer finances; Apple is currently being investigated after accusations that their credit card service discriminates against women, and financial regulators are worried about the impact of Facebook’s planned cryptocurrency.
Google is no stranger to controversy related to their handling of customer privacy. Like many tech companies, Google collects data about their customers’ search habits, location, and phone usage patterns in order to personalize their services and serve more relevant advertising. The company has attracted more than its fair share of critics for its handling of services like Street View, which photographs pedestrians and sometimes even the insides of people’s homes as seen through their windows, and for encouraging users to use their real names on services like Youtube and Google Plus. Additionally, Google has come under fire for improperly collecting data about private Wi-Fi networks using their Street View cars, and for its massive advertising network which tracks customer behavior as they use different parts of the internet. As Google is a newcomer to the financial services space, how they handle their customers’ banking data, in addition to the tremendous amount of other data the company collects, is sure to be closely scrutinized by both privacy advocates and the general public. The move is also likely to cause political problems for Google, as Washington politicians are skeptical of both large banking institutions and the rapid growth of Big Tech and its deepening integration into people’s personal lives.
Tyler Olhorst is a Contributing Editor at The National Digest based in New York. You can reach him at inquiries@thenationaldigest.com.