Google to Offer Personal Checking Accounts

Google is partnering with Citigroup to launch a personal checking account service currently codenamed Cache.

The move is the continuation of tech firms’ recent increased focus on consumer finance as Silicon Valley challenges the primacy of the banking industry. With Facebook working to launch its Libra digital currency, Apple introducing its own credit card, and Amazon’s plans to launch personal accounts for consumers, it was only a matter of time before Google announced its own banking plans.

“Everyone wants the payment to happen through their device, because if it’s effortless it will entrench you in their ecosystem,” said Gerard du Toit, banking consultant at Bain. “The information is valuable for Google in particular; if they are able to connect a specific purchase to advertising, there’s immense value in that.”

This new “smart checking account,” as Google calls it, will come with budgeting tools like those included with the Apple Card. Details of the accounts have not been finalized, but it seems the company is more interested in offering partners access to Google Pay than directly branding and handling the product.

“Our approach is going to be to partner deeply with banks and the financial system,” Google executive Caesar Sengupta said. “It may be the slightly longer path, but it’s more sustainable.”

Citigroup later confirmed that it signed a deal to partner with Google on the accounts.

"We are pleased to explore providing checking accounts nationwide through Google Pay," said Elizabeth Fogarty, a Citi spokesperson. "This agreement has the potential to expand the reach and breadth of our customer base while complementing our continued investments in digital, particularly our market-leading Citi Mobile app."

News of the project comes just a day after a whistleblower revealed that Google is partnered with the healthcare giant Ascendant through a project called Nightingale, possibly giving the tech giant access to the private medical data of 50 million Americans.

"High-tech companies are experts at data exploitation and monetization," said Dennis Kelleher, president of Better Markets. "It's not clear that anyone other than high-tech companies would benefit from allowing commercial companies to provide those products and services, rather than financial companies."

The leaked information has already drawn a federal inquiry into how Google plans to protect sensitive personal data, and the partnership with Citigroup will likely lead to more scrutiny from regulators and even harsher political opposition from Congress.

“There is a real debate about whether big tech or big banks are more politically toxic in Washington,” said analyst Jaret Seiberg. “We don’t see how combining the two will make either less contentious.”

David Donovan, a technology-banking specialist at Publicis Sapient, said that technology companies are partnering with banks for exactly that reason - to deal with the regulatory issues.

“They could prove to be a Trojan horse over time,” Donovan said. “But the banks are also thinking this is an easy way to get customer acquisition, so it could be a win-win for both sides.”