Google is set to leverage these partnerships to offer digital checking and savings accounts through Google Pay, with the banks hosting the accounts. Google will be co-branding the digital banking experience, unlike the majority of neobanks who relegate their banking partners to the shadowy realm of their terms of service agreements.
What does the news mean?
The news is relatively unsurprising, given the trend of big tech companies venturing into financial services (techfin), and Google’s desire to offer the same. Both sides of the partnership benefit—Google gets the opportunity to offer banking services and access to customer financial data of partner banks while the banking partners get to leverage Google’s digital experience enterprise to acquire new customers.
The question is will Google stop at banking partnerships or go all the way and file paperwork for a banking charter? Several fintech companies have started traveling down that route, and Varo recently got approved for a retail banking charter. It’s unlikely, given that last year Google was involved in exploratory conversations with the Office of the Comptroller of the Currency (OCC) around filing for their national banking charter and decided to pull back after state-level opposition started to fight back against the charter itself.
Banking partnerships provide a relatively easy route to expanding Google’s share of consumers’ wallets, so there isn’t much reason to tangle with regulators and jeopardize their relationships with existing partners.
Increased interest in both categories signals that financial services institutions are embracing the need to meet their customers where they are and the market is taking advantage. Financial institutions looking to expand their digital presence are opening up their data sets via APIs and businesses are leveraging those APIs to embed financial products and increase their own stickiness with their customer base.
The trend should continue, and Google’s entry into the banking services space should spur even more heated competition among fintech companies, financial services companies, and big tech for an increasingly digital customer base.
Patrick is the manager for the verticals and tech teams as well as G2's fintech and legaltech analyst. As a G2 analyst, Patrick focuses primarily on the fintech and legaltech spaces in addition to a slate of other vertical categories. Fintech's explosion in popularity has created a compelling challenge to accurately represent the spaces on G2 and produce high-quality, relevant content for external consumption. Patrick leverages his relationships with vendors, the unique data that G2 has accrued via more than 1 million user-generated reviews, market surveys, and product data to produce insightful reports and thought leadership content within his two focus spaces.