The US bank sees the association with Google as a key selling point in launching a digital bank account into a crowded and complex market but will be anxious not to cede as much control of their new product as, for example, Goldman Sachs did to Apple.

Apple seemed keen to upstage Goldman Sachs with their joint credit card, with slogans such as ‘built by Apple, not a bank’.

In conversation with Finextra, Citi confirmed its partnership but was coy about Google’s direct involvement. A spokesperson said that Citi is “exploring providing checking accounts nationwide through Google Pay. This agreement has the potential to expand the reach and breadth of our customer base while complementing our continued investments in digital.”

The early indication is that Citi and fellow partner Stanford Federal Credit Union’s branding will take centre stage, with Google taking a relative backseat. Citi will also be keen to emphasise that this is an account of their own design and direction rather than a “Google bank account.”

Herein lies the problem for financial institutions in these collaborations with Big Tech. Banks naturally see the benefits in leveraging the user base that Apple and Google command, but do not wish to be relegated to the role of junior partner.

In addition to this, despite Caesar Sengupta telling the Wall Street Journal that the firm will not be selling customers’ financial data, this is sure to be an area of some concern for its partners, customers and regulators.

On this point, Citi has told Finextra that “privacy and transparency are, and will continue to be, critical priorities,” highlighting concerns regarding Google’s past record with use of consumer data.

Matters of trust

Finextra has spoken to leaders in the digital banking space about the challenges that Google and Citi will face and what effect Cache will have on the industry as a whole.

Matt Ford, chief product officer at digital bank Tandem, believes that data security is the reason for the backseat approach that Google is taking with the branding of the new account.

“To operate as a bank, you need brand trust. Google is probably smart to leverage the established trust of their banking partners,” he says.

Ford adds that Google have a long way to go before they get a slice of the retail banking market.

“As the checking account is the most central financial product in a customer’s life, it requires a huge amount of trust in the provider for consumers to move on mass.

“Google has to come from behind and overcome negative brand equity when it comes to trust.”

As sensitive an area as data privacy is at the best of times, it becomes even more so when related to matters of money. The backlash against Facebook’s proposed Libra project is an example of this.

Consumers trust Google enough to use their e-mail, location and entertainment services, thus furnishing it with their most sensitive and private data. Financial data is something else however, particularly when it relates to issues around income and borrowing.

“Emotionally, money is an extremely private topic,” Ford says. “Even without selling data, the thought of hyper-targeted ads appearing across the Google suite of products based on consumers’ spending behaviour is likely to be a step too far.”

Sizing the competition

Google’s entry into banking is the latest in a number of moves by Big Tech companies into finance. Along with the launch of Apple’s credit card, JPMorgan is reportedly looking to offer virtual bank accounts to gig economy firms via services like Airbnb and Amazon.

While it is far from easy for Amazon to become a bank, it is still easier than it would be for JPMorgan to become an online marketplace. Banks therefore have more to lose in any stand-off between the two industries, explaining why these partnerships are becoming quite common.

“Banks will not only survive, but also thrive when they are open to collaboration and Google’s move could be an example of what the future of banking looks like,” says Michael Kissos Hertzog, CEO of digital bank Pepper.

Research by Pepper earlier this year found that 64% of decision-makers at UK retail banks think that Open Banking and PSD2 regulations have given the tech giants an advantage over traditional banks.

“Google’s entry into the market should serve as a huge wake-up call to all incumbent banks,” Hertzog says.

“It is now more vital than ever that banks must stop being ‘too proud to collaborate’ and move away from the profit and loss business model to one that is completely customer-focused.”

It is difficult to ignore the innovation that Google could bring to the retail banking market. Offers and discounts personalised to customers’ internet searches and social activity could be warmly received, even if these are already being offered by many other digital banks.

It will be interesting as well to see how the firms plan to distribute their product, the types of customer it is primarily targeted at, how it ties into other Google products, and how this will be used to bring additional benefits to the customer.

"Google would need to adopt a more innovative approach to go above what is already being done,” Ford says.

“The extent to which they can successfully demonstrate value to customers whilst balancing control, privacy, personalisation and transparency, will be the difference between success and failure.”