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Google Moves Into Banking With Project Cache

Google sets its sights on another vertical to dominate: it plans to start offering checking accounts, reports The Wall Street Journal (WSJ). The service, code-named Cache, will be available next year in partnership with Citigroup and Stanford Federal Credit Union. The latter is a credit union in Palo Alto with $3 billion in assets under management (AUM) that provides banking services to the Stanford community and employees of many technology companies in the Bay Area, including Google.

The plan is for Google to provide the interface while its partners would contribute the financial know-how and the “plumbing,” including back office and compliance.

The new service will complement Google Pay, and it coincides with Google’s rivals Apple and Facebook expanding their digital payment products with a credit card offering (Apple) and plans to create a digital currency (Facebook).

So, the reasonable question is: What’s in it for all involved?

Our Take

For financial institutions, this is a strategic partnership that will give them access to generations of younger and more technically savvy customers who prefer to handle their finances via a range of mobile apps rather than visiting a branch.

Banks will also benefit from having access to better tools and the Google brand (which still seems to inspire trust; the question is for how long – see our note Google Has Personal Medical Data of Up to 50 Million Americans: Project Nightingale). And of course, these banks will have access to innovation at a time when the industry is being disrupted by fintech.

For Stanford Federal Credit Union specifically, there is another reason why this is a win-win: it already serves a lot of Google employees. (Although I wonder whether this deepened partnership may turn into an acquisition at some point.)

Then what’s Google’s play? One word: data! Google claims as usual that it will not sell checking account users’ financial data. Of course not – it doesn’t need to. Just like with search keywords and health data (see our note Google Builds AI-Powered Tools for Patient Care: Project Nightingale), the more data Google has and the more diverse that data is, the more it can tailor its services and further lock you (and its partners) in. In the process it can sell aggregated data to advertisers and consolidate its power and market dominance – not just in the information access and advertisement markets, but also more recently in healthcare and now in financial services.

Google checking accounts are just a first step in that direction. Expect Google credit cards and other financial services to come in the near future.

There is a reason why the project is code-named “Cache.” Of course, it is a clever play on the word “cash” but also on “cache” as used in computing – after all, Google is a technology company – which means a “software component that stores data so that future requests for that data can be served faster.” See the link?


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