Last month Google announced that it is partnering with Citi and Stanford Federal Credit Union to launch a “smart” checking account linked to Google Pay next year. Now Citigroup’s CEO is explaining his firm’s reasoning behind the deal.
“We’ll have access to the data, Google will have access to the transactional data and the search listing that in many cases they already have today,” CEO Michael Corbat said during a recent panel discussion, adding that Citi believes “it’s a very efficient way to bring new clients into the bank.”
But while Corbat is obviously open to partnering with tech firms, he has sent out a warning to banks that the shouldn’t turn into a “dumb utility,” noting that financial institutions need to be careful that it doesn’t put in more than it gets out of a partnership.
It also helps that Google seemingly has no interest in becoming a bank. The checking accounts will be handled by Citigroup and a credit union at Stanford University. None of the branding will showcase Google. Instead, the project, code-named Cache, will serve as an extension of the Google Pay ecosystem, which has 67 million monthly users in India, but still needs to catch on in the United States.
And a recent McKinsey & Co. survey indicated that 58 percent of respondents said they would trust financial products from Google—higher than Apple and Facebook, but lower than Amazon.
That doesn’t mean the partnership with Citi will go off without a hitch. Industry analysts expect it to be highly scrutinized by Washington lawmakers who might be concerned over privacy issues. Jaret Seiberg, an analyst at Cowen Washington Research Group, wrote in a research note that while he doesn’t expect Capitol Hill to block the launch of the checking account, hearings about the offering will likely be held soon.
Google isn’t the only tech giant getting into the payments game. Apple teamed up with Goldman Sachs to launch the Apple Card in August, while Amazon recently partnered with Synchrony Financial on a co-branded credit card. In addition, Facebook launched Facebook Pay, a payment system operating through Facebook, Instagram, Messenger and WhatsApp, last month.