It was only a matter of time before Google announced another shiny new financial product to keep up with its peers.
Unsatisfied with just Google Pay – the digital wallet that allows users to pay for items using their mobile device – the tech behemoth has decided to go one step further with Google Cache (pun intended, I assume), which will offer current accounts as early as next year.
Google plans to partner with Citigroup and Stanford Federal Credit Union to offer the accounts. The latter is based in California along with Google HQ and is where a lot of Google employees have accounts – so it is an obvious choice.
Google is in good company.
Earlier this year, Apple launched its own platinum credit card in partnership with Goldman Sachs. Uber offers credit and debit cards to drivers and Amazon launched its own credit card in 2017, which rewards customers for making purchases via its website.
What does Google hope to gain with this new product? It doesn’t want to become a bank and deal with all the regulation that comes with it, evident by the fact that it has partnered with two other financial institutions to do the heavy lifting.
Perhaps this is a precursor to offering a new and improved Google credit card. In 2012, Google launched its first credit card, aimed at encouraging small businesses to buy more Google ads on credit, but it didn’t take off and was cancelled shortly afterwards.
Sankar Krishnan, executive vice-president, banking and capital markets at Capgemini, says that when it comes to tech giants offering credit, “Google was ahead of its time, but things have changed”.
Now that Apple, Uber, Amazon and a number of other players have started offering credit cards, Google could be using its debit accounts as a precursor to move into the credit space once more.
People are becoming more aware of the value and the vulnerability of their data, yet time and time again, we sacrifice too much of our data at the altar of convenience
Maybe Google is doing this out of pure altruism. In the US, 22% of households are either unbanked or underbanked, but having access to an account via your smart phone could change all of this.
“Encouraging people to save via their smart phone – something that most people have – will encourage saving,” says Andy Schmidt, vice-president, global financial services at CGI.
“The barrier to opening up an account via your mobile phone is so much lower than it is to opening one at a branch. As more and more technology companies enter this space, financial inclusion should increase.”
But I have a feeling that Google and its peers aren’t providing banks accounts or credit cards out of the goodness of their hearts. So why are they doing it?
It’s the data, of course, because – as the saying I have just made up goes – if you want to know the most intimate details of a person, find out what they spend their money on.
You would think that Google Pay would provide more than enough insight into the spending habits of people who primarily use their phones to transact, but what if you forget your phone, your battery has died or a shop doesn’t take contactless payments? Then you are forced to use a credit card.
So, say you create a bank account – that can be used on and offline – then the wealth of spending information you have access to will grow. Combine this with data on where a person travels to and from (Google Maps and Waze) as well as your in-home virtual assistant (Google Home) and you have a recipe for a company that knows pretty much every minute detail of your life.
And what happens if the data get into the wrong hands? In March 2018, Google discovered a bug in its application programming interface (API) for Google+ that allowed third-party app developers to access the data of users, affecting up to 500,000 accounts – a data breach that the company failed to report until seven months later.
Only this month – just one day before Google announced its plans for Cache – the technology company was embroiled in a data breach scandal after a whistleblower told the Guardian newspaper that Google staff had access to the medical records of up to 50 million Americans, following the transfer of information from healthcare provider Ascension to Google.
People are becoming more aware of the value and the vulnerability of their data, yet time and time again, we sacrifice too much of our data at the altar of convenience.
Perhaps it is worth highlighting the risks once again, because this time the message could get through.