Does Google’s New Digital Banking Platform Pass the Toothbrush Test?

The recent news that Google is launching a digital banking platform in the US captured my attention. These co-branded accounts will see banks using Google Pay as their platform for new digital checking accounts, combining their existing infrastructure with the familiar Google user experience. 

Before my current position as Chief Business Officer for the fintech company Apifiny, I worked for 12 years at Google as Head of Google X for Asia Pacific plus several other roles. Eight banks are already on board with the partnership, which got me thinking: What does this digital banking partnership mean for banks? And will this new business unit pass Google’s “Toothbrush Test” – a highly useful product that consumers turn to at least twice a day?  

1) I believe bank and credit unions can expect five benefits from this venture:

• New customer acquisition. As of a few years ago, when I was a Google employee, Google had 7 products with over 1 billion users: Gmail, Chrome, Maps, Search, YouTube, Google Play Store, and Android (probably more than 7 today). That’s a massive opportunity for Google since it can connect directly with these consumers to drive their interest to co-branded checking accounts. It creates a vast sales funnel for the banks and credit unions that partner with Google, representing new opportunities for smaller players. Additionally, Google’s users can be expected to be more plugged in to new technology and use more mobile banking than traditional customers, which might help to bring down the average service costs that banks incur.   
• Deliver world-class user experience to customers by leveraging Google’s strength in consumer mobile and web applications.  As mentioned previously, Google has at least seven products, with over 1 billion users. Many of these are the top-rated mobile apps on the Android Play Store or are top web properties. Google is exceptionally strong in consumer-facing app development and distribution. The partner banks and credit unions can rely on Google to handle the front end consumer functionality for end consumers and provide world-class user experience for these co-branded accounts.
• Differentiate themselves from their competitors. Most banks try to differentiate themselves from their local, regional, or national competitors in traditional ways, such as providing superior customer service, longer open hours in the evenings or on the weekends, lower fees, etc. By partnering with a strong tech giant like Google, they are differentiating themselves from their peers in completely new ways.  
• Accelerate their digital/mobile banking strategy. BBVA USA is one example of a bank that already has a digital/mobile banking strategy. A Google partnership is another path for them to carry out their strategy and build on it. Google has deep strength in geo-location and mobile operating systems and applications. Banks and credit unions may be able to tap into Google geo-location expertise for new product and service offerings. 

For example, Google could create mobile app-driven marketing opportunities that offer consumers additional info on low-interest home equity loans from a partner bank, which the consumer would see when they visit a furniture store, a mall, or during a Google search for high-end furniture. This would depend, of course, on the consumer opting in to various privacy settings via their mobile device.

• Be seen as a banking innovator/thought leader. When most people think of banks, they probably think of “safe, secure, trustworthy,” and not “innovative and cutting edge.” Google, on the other hand, is often viewed as one of the most innovative companies in the world. Google X, where I was Head of Asia Pacific for a stint, works on “moonshot” technologies that change the world by 10X, such as self-driving cars and balloons that provide fast internet access. Partnering with Google will catapult the banks and credit unions into the limelight as innovators and leaders in the digital banking space.  

2) There are three implications for the banking industry:

• Large tech companies want to leverage their consumer base and expand to offer more financial services products. Tech giants like Google, Apple, and Amazon already have billions of consumer users. They have access to their credit card information via the Google Play Store, the Apple App Store, and Amazon’s variety of e-Commerce apps and services. Just as Amazon offers a co-branded credit card, it is clear that the tech giants want to continue to be the hub through which other partners can offer additional financial services products.
• The banking industry is moving to offer more digital and mobile banking products and features. Just as tech giants are providing more financial services products (often through partners), banks are also offering more digital/mobile banking products and services. Customers find these mobile features highly useful and available 24x7. For example, depositing checks through a bank’s mobile app: Due to Covid19, it may not be convenient to go to a bank’s ATM to deposit checks. By using a mobile app, the consumer can deposit the check from any place at any time.  
• The banks that succeed over time will be the ones who innovate and provide more advanced services. As consumers are increasingly tech-savvy and use more digital and mobile banking products and services, the banks who succeed will be the ones who offer the most innovative products. Today, it’s probably already standard for a bank’s mobile app to offer mobile check deposit functionality, and two-factor authentication for security. In the near future, due to the recent regulation that banks can provide custody of cryptocurrencies, perhaps the banks that will be seen as innovative will be the ones that offer cryptocurrency custody services. Currently, it costs $30 - $45 to send a wire transfer that takes 3-5 business days. Banks that provide an instant funds transfer or payments/remittance service with FX conversion, at a very low cost using a mobile app, may emerge as the innovative leaders in the new banking landscape.  

3) The three main downsides or concerns that banks or credit unions should be aware of from these ventures are:

• Tech giants still own the relationship with the end consumer. The big tech companies have customer bases in the billions, which allows them to quickly deliver new signups to the co-branded accounts. However, companies like Google still own the consumer relationship in that scenario. With many bank partners offered as options to choose from, that means that the bank is more of an OEM in the relationship—the consumers’ loyalty will be to the tech giant, not the banks. 
• Tech giants have more data and can leverage that to offer even better financial products. Artificial intelligence and data mining have revolutionized many industries. By offering co-branded accounts through a tech giant, the tech giant can gather even more customer financial transaction data, which will help it develop even more advanced algorithms to improve all of its other products. In the future, if the tech giant wants to leverage that massive amount of data, it may be able to create and launch its own financial services product, without the need for a partner.   
• If the personal data gets hacked, it may affect the bank’s brand and reputation. In general, Google, Apple, and Amazon have very strong consumer data privacy and protection policies and systems. However, with the enormous amounts of data generated and stored, it is possible that in the future, some portion of consumer data may be compromised by hackers. 

A data breach could damage a bank’s brand. These institutions typically enjoy a safe/secure/trustworthy reputation. However, a consumer could still see a data loss as the bank’s fault, even if it’s entirely the tech giant partner’s responsibility.

4) This Passes Google’s "Toothbrush Test"

During the 12 years I worked at Google, it was very clear from our leaders that the company wants to provide users with highly useful products that delight customers. I believe it was Larry Page who said that a product is successful if it meets the “toothbrush” test – the product is used by large numbers of consumers at least twice a day. Since financial services needs are a large part of consumer’s lives, Google had launched Google Finance a long time ago, to compete with Yahoo Finance.  

Although Google Finance was shut down, many of the Google employees who worked on Google Finance went to other groups, including Google Pay. As a result, Google’s ambition is clearly to continue to offer consumers useful applications that meet their financial services needs, whether they are in the areas of banking, mortgages, insurance, etc. Not only will this provide Google with even more data to further improve all of their other products, it will strengthen Google’s relationship with the consumer, and make the relationship even more “sticky.”    

— Josh Li is Chief Business Officer of Apifiny