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Google Partners with Citi Bank Offering Checking Accounts to Rival Big Techs in Banking Dominance

Technological advancements have shaken up every sector of the global economy in recent years. Now, the banking space is under siege from various tech giants. These big tech companies see financial services as a method of getting closer to users and collecting valuable data. 

Interestingly, Apple Inc. introduced a credit card this summer in partnership with Goldman Sachs. Amazon.com Inc. has approached various banks to discuss the possibility of offering checking accounts. On the other hand, Facebook Inc. is working on a digital currency it expects will upend global payments. At the same time, it has announced the Facebook Pay service that will work independently from its Calibra network and wallet.

Now, Google has followed suit. The search engine giant plans to provide checking accounts through a partnership with Citigroup banking giant and Stanford Federal Credit Union. According to the Wall Street Journal, the three firms are working on a project dubbed Cache expected to launch in 2020.

The general manager and VP of payments at Google, Caesar Sengupta, said that Google aims to bring value to banks, consumers, and merchants. He said that the Cache project could also include loyalty programs. Sengupta insisted that Google will not sell any users’ financial data.

Recently, Federal regulators have already been conducting thorough investigations to determine whether tech behemoths like Facebook and Google already have too much control over user information. 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.” 

The head of the United States consumer banking at Citigroup, Anand Selva, said that partnerships like this one with Google will enable the bank to thrive beyond physical branches. He thinks that the bank needs to be where its customers are.

The news of project Cache came just a day after a whistleblower revealed the existence of Project Nightingale which is Google’s partnership with Ascendant, a healthcare giant. That controversial project could give Google access to personal medical data of around 50 million Americans.

On November 12, Angela Merkel, the German Chancellor, tried to convince Europe to regain control of its data from Silicon Valley tech giants. In her remarks, she urged Europe to establish ‘digital sovereignty’ instead of heavily relying on Microsoft, Amazon, and Google. Merkel added:

“So many companies have just outsourced all their data to US companies. I’m not saying that’s bad in and of itself – I just mean that the value-added products that come out of that, with the help of artificial intelligence, will create dependencies that I’m not sure are a good thing.”

Although Google has a wide reach of around 1.4 billion people who regularly use Gmail, up to now every one of the tech giants’ financial offerings has encountered challenges.

Google’s move is the latest sign of Silicon Valley’s relentless efforts to enter the financial firms’ territory. The tech giants look to expand their hold on customers and collect more data on their finances. Simultaneously, it shows that traditional financial institutions like banks are open to partnering with technology firms to avoid getting shut out of the market entirely.

The financial institutions in the Google agreement are tasked with handling most of the compliance requirements. The search giant has spent several years developing and enhancing its payments capabilities. In the process, it has provided consumers the ability to send money and check out both in stores and online using Google Pay.

Consumers can receive their paychecks and transact only inside the Google ecosystem using the checking accounts. Bryce VanDiver who is a partner with Capco who advises payment companies and banks believes that more of these partnerships will arise. However, it does not spell the death of banking.

An inside anonymous source stated that Google chose to partner with Citigroup partly since the lender spent over a year building its digital banking arm. That effort has helped the bank gather over $4 billion in deposits in 2019. 

The only worry that arises for the finance industry is that tech giants may one day replicate the success of WeChat Pay and Alipay in China. In these cases, money flows through digital channels without the need for banks.

Google Partners with Citi Bank Offering Checking Accounts to Rival Big Techs in Banking Dominance

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