Is online banking FDIC insured

Google Pay becomes the online banking center

With eight US banks so far, Google will launch a digital account service in the coming year. All the required functions will be accessible via Google Pay. The cooperation partners also promise their customers a better overview of their finances through additional evaluations.

After the first information about Google-branded bank accounts leaked in autumn 2019, there are now more specific announcements. From the coming year, Google Pay will no longer serve as a payment platform alone, but will become a fully-fledged, mobile online banking system. Account opening and management, the check submission and transfers that are still common in the USA, evaluations of one's own financial status and investment products - all of this should be possible via smartphone in the Google Pay app.

Cooperation model preferred

So far, Google has not yet relied on its own banking license, but relies on cooperation with the financial sector. A total of eight banks have announced a partnership for account management via Google Pay in the past few days:

  • Citi
  • Stanford Federal Credit Union
  • Bank Mobile
  • BBVA USA
  • BMO Harris
  • Coastal Community Bank
  • First Independence Bank
  • SEFCU

Under banking law, they manage the digital accounts and secure them like regular accounts with the US deposit protection fund NCUA or FDIC. The customer and account data should also continue to be managed via the existing banking systems.

Banks benefit in several ways

From the reports from the banks, however, it can be seen that part of the cooperation consists in using Google's know-how to set up highly scalable, secure IT structures. In other words: The partner banks will in future rely on additional resources from the Google Cloud for their core banking systems and receive technical support in the implementation of this project.

In addition, the financial institutions see a further advantage of the cooperation in the development of an attractive front end for the banking functions. They rely on the technology giant's experience of realizing “intuitive user experiences”, as stated, for example, in the message from BBVA USA.

“Google is excited to be working with these partner banks to deliver a digital experience that meets the changing needs of a new generation of customers. We believe that we can use our technological know-how to help users, banks and the entire financial ecosystem. "

Felix Lin, Vice President Payments Ecosystems

Happier customers

Last but not least, the banks expect better access to a young, mobile customer group in this way. Although it is very tech-savvy, it is still largely conservative when it comes to financial transactions. According to a survey by PYMNTS, only around 40 percent of those questioned are willing to entrust their financial transactions “extremely” or “very” likely to the big tech (such as Google) or FinTech. The majority still rely on traditional institutes, but expect appealing digital services.

As part of the cooperation, this is exactly what is to be implemented: Traditional banks offer the security that your own money is in good hands, and Google ensures that you can deal with it quickly and easily. In addition to paying and sending money, this also applies to loans and investments, as the account-keeping banks make their products available via the app. In addition, tools for evaluating transactions and budget planning should be included so that the customer always has an overview of all his systems and a better overview of what he is spending his money on.

Data, data, data

Only a few details are known about the cooperation. In particular, the part that is crucial for Google - data analysis - is still in the dark. The central business model of Google is the collection of data about the individual customers. Interesting, new data treasures could arise here. So far, there have been no statements from Google as to whether the digital, branded accounts are also linked to a digital Google debit card.

Knowing how solvent a consumer is, when, what and how much he buys is valuable information that could be used for marketing by Google and the cooperation banks, but also by third parties. It will be interesting to see how this will be regulated in the USA and in the event of a possible leap to Europe, which will come sooner or later if successful. hj


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