THE LEX COLUMN: Google’s soft-shoe shuffle into banking 🔒
Instead of taking on full responsibility, the tech giant is partnering with financial services firms
The unwillingness of tech giants to disrupt banking shows how complex and unattractive that business has become. Google’s foray into financial services illustrates this. The search leviathan is roping in Citigroup and Stanford Federal Credit Union, a local California lender. Google plans to offer current accounts from 2020. At first glance, this looks like a flirtation with white label distribution rather than the end of days for Wall Street.
The business is executing a soft-shoe shuffle into financial services. Partner banks will handle financial and compliance matters while Google learns the ropes. This could edge the group closer to the ultimate prize for online platforms: the banking data on which all other aspects of a consumer’s economic life depend.
If current accounts go well — and expansion does not trigger whooping sirens among Google’s detractors — it could offer a full spectrum of financial services, as China’s Alipay does. The four-year-old Google Pay digital wallet system would mesh nicely with this. It should have 100-million users by the end of 2020, according to Juniper Research.
A distinctly double-edged opportunity may eventually confront consumers: to bank, shop, socialise and study within an ecosystem built by a single tech group. Aggregation of data multiplies its value. Ethical objections proliferate at the same rate.Read more: Business Day
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