Google has entered the fintech chatroom
Get ready to see Amazon, Apple, and now Google rule our financial lives soon
Good morning everyone! Happy Tuesday!
I’m saving Reconcile updates for later this month as we’re going heads-down on building our v2 over the next two weeks. Also, I want to get more of you onboarded as soon as possible and to include your feedback in our v2. If you’re available this week, slot time on my calendar using this link and we can chat product!
That being said, here’s some big fintech news that’s been on my mind!
Fintech News of the Week
Last Monday, Google announced plans to expand its Google Pay platform with digital banking services like digital checking and savings accounts through partnerships with eight financial institutions (a mix of global banks, community banks, and credit unions). It seems like Google will deploy front-end features like budgeting tools and financial insights, while the banks will do the heavily-lifting on the back-end with ACH, deposit collection, payment processing, etc.
Benefit for Google
Google can deliver even-more personalized deals (ads) to end-users by analyzing their shopping preferences. Get ready to see more “25% of Dominoes tonight” ads across your Gmail, Maps, and Wallet. Consumer spend data is extremely valuable for Google, and I’m sure is the primary reason for it to enter this space.
Other reasons include deepening user relationships and driving more engagement for Google Pay, which derives a small fee every time it’s used to transact. I’m sure Google also wanted to go tit-for-tat with Apple and Amazon as they both enter the financial services market as well.
Benefit for Banks
Banks get the PR benefit of being associated with innovative tech firms. This is particularly valuable for community banks and credit unions that are not known for its tech-forward products and services.
“They're looking to get the brand recognition of being aligned with Google,” - Emmett Higdon, director of digital banking at Javelin Strategy & Research
Banks are also hoping to access a slice of Google’s one billion monthly active customers. As more of us shift towards digital banks and fintech apps to manage our money, legacy banks and credit unions were the most likely to be left behind. Now they can serve tech-savvy customers, who would probably never have opened an account with them, without paying a huge acquisition cost.
Additionally, community banks and credit unions with small product teams can now integrate into one of the biggest mobile wallets with Google doing most of the implementation.
This is another example of the “banking-as-a-service” model that financial institutions have deployed over the last few years. It feels like a definite win for banks as they get a top tier tech company to revitalize its end-user experience and attract the already emergent tech-savvy population.
For Google, I’m still unsure of this partnership as it may expose them to additional regulatory oversight around its data collection and privacy practices. Furthermore, who would even feel comfortable banking with Google and giving up even more data to them? Cornerstone Advisors launched a study last month that showed more than half of US consumers wouldn’t ever open a Google-backed checking account.
Overall, as a fintech-geek, I think this is an interesting partnership that follows the Apple-Goldman Sachs model from a few years ago. Even Amazon continues to creep into the financial services market via a similar tech-bank partnership (which I wrote about a few weeks ago). Big tech firms want to get closer to their end-users and want to introduce their product teams to a new, juicy financial services market that’s ripe for better user experiences. As a startup that’s looking to revamp the reconciliation experience, I’m all for more partnerships like this!
P.S. if you work at a financial services institution and would like to partner with us, ping me on LinkedIn!
Thanks for reading!
Jaimin Desai - CEO & Co-Founder of Reconcile
*P.S. If you have any thoughts on our content, please leave a comment or email me at email@example.com!