As it moves deeper into personal finance, Google is relaunching its payments app, allowing users to open mobile bank accounts and to pay friends — similar to PayPal’s popular Venmo and Square’s Cash App.
These changes are expected to have broad appeal as consumers move to digital payments during the coronavirus pandemic. This is especially true among younger, more tech- and mobile-focused customers, said Anand Selva, CEO of U.S. consumer banking at Citi.
Based in Silicon Valley, Google partnered with Citi and Stanford Federal Credit Union to launch mobile bank accounts and said it plans to add 11 new banks in 2021, CNBC reported. Users can also ask for a physical debit card, which will run on Mastercard’s network. Google Pay will let users send peer-to-peer payments — a feature that made Venmo and Cash App household names.
The move to digital in personal finance has opened the door for collaboration among financial and technical institutions, said Meredith Spatz, Mastercard executive vice president, North America.
“The consumer migration to digital banking was well underway and then the pandemic hit, turning the consumer’s desire for digital interactions into a need,” Spatz said.
For the banks, tech partnerships like Google checking can help attract a new demographic and grow customer deposits fast, CNBC reported.
However, one potential risk for banks is that tech companies will own the customer relationship and branding in these deals, keeping a lucrative part of the deal.
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Still, customers know Citi is the one holding the deposits, said Anand Selva, CEO of U.S. consumer banking at Citi.
“The account is a Citi product, but customers get the best of both worlds with the Google ecosystem,” he told CNBC. The traditional banking model is evolving, he said, and partnerships are becoming key in the industry’s future.
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The upgraded payment system marks the tech giant’s deepest dive yet into the U.S. financial system, Bloomberg reported. It will give Google its closest look ever at consumers’ finances — valuable data that banks have held onto tightly. Google said it will offer customers insights on how they spend and save their money.
This underscores Google’s willingness “to intertwine itself in the vast cash flows and valuable data generated by everyday commerce,” Bloomberg reported.
Google is under investigation in the U.S. for antitrust violations and facing regulatory scrutiny over laws that restrict digital data collection and use.
The company made privacy and security a priority with the revamped app, said Caesar Sengupta, vice president of payments business at Google. For example, personal data from the app won’t be sold to third parties or used to improve Google’s ads business, he said. And some new features such as the ability to automatically import receipts from Gmail and Google Photos, are turned off at the onset.