Google is now dipping its toe in the finance sector. It will soon offer checking accounts to consumers. And it may become a giant in finance sector.
Its project is named Cache. The project officially launches next year. Citigroup Inc. and a credit union at Stanford University will run the accounts.
Big tech companies like Apple and Google see financial services as a way to glean the information of customers. Apple Inc. introduced a credit card this summer and Amazon.com Inc. has talked to banks about offering checking accounts. And Google wants to do the same by offering checking accounts.
The Tech companies challenge the incumbent financial-services firms, who fear losing their power and customers to the big guns. Even the regulators in Washington are investigating large technology companies who seem to have too much power.
Banking and technology together is the key to a successful business. But most of the times they do not complement each of other. Recently, Apple offended its credit-card partner, Goldman Sachs Group Inc., when it ran as campaigns claiming Apple designed the card and not a bank. There was a fallout between the two parties.
But Google’s approach seems different. It is dead set on making allies, and having long term relationship with them. Google itself admitted that it will partner with banks and leave the financial plumbing to them. It will only handle the technical part of the deal.
Google executive Caesar Sengupta said “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.”
Checking accounts are a hotcake product, people don’t switch very often. So, Google isn’t aiming very high with checking accounts. But the catch is, Google will have the data like how much money people make, where they shop and what bills they pay. The information itself is worth it.