It is raining competition for some challenger fintechs as Google goes closer into quasi banking operations. Yes, while Google will not be the bank (it has to partner with banks), it will take out the shine which has made some digital banks preferable to the traditional banks. So, if an old century bank gets the blessing of Google, and people can access its services via Google, the acceleration of some digital banks may be muted.
Yes, Citi can send Google to go and battle the digital competitors while it stays at the back handling the regulatory paperworks. This is a new order with a massive new basis of competition. As I noted in this Harvard Business Review piece, Google and Facebook are out for dominance and you need to compete through the flanks. Never, I repeat, go frontally in this battle. CNBC summarizes this new Google playbook.
- Google will let users open a bank account through its Google Pay app, in a partnership with Citi and Stanford Federal Credit Union beginning next year.
- The tech giant is relaunching the payments app to allow people to pay friends, similar to PayPal’s popular Venmo and Square’s Cash App.
- “It’s going to have a broad appeal, but especially among the younger population, Gen Z, that are more tech-driven and mobile-focused,” said Anand Selva, CEO of U.S. consumer banking at Citi.
“Along with our bank partners, we were looking to make banking more relevant for the mobile-first generation,” Caesar Sengupta, general manager of payments at Google, told CNBC in a video interview. “It will help our partners make banking more approachable to that generation, and not only make it more relevant, but make it more fun.”
As you can see here, Citi is already having fun: Paypal, Venmo, etc, we have help now! Hahaha.
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Incoming CEO of Citibank Jane Fraser also appeared on Google’s virtual event, saying the Citi Plex account is “a new way to bank.” Today’s customer is of a new generation that wants a “fresh, relevant and better relationship with their money,” Fraser said. “We want to empower them with an account that provides smart very smart financial services built from the ground up with financial wellness and mobile functionality at the very core of the design.”
You’ll create an account from your phone, and “within minutes your whole bank is on your phone,” Fraser said. There are no monthly fees or minimum balance requirements, and the app offers “AI-powered insights to help users save more and set their saving goals.” You’ll get a digital Mastercard debit card instantly and a physical contactless card upon request.
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Disrupt the disruptors. If you think you are home and dry, think again; just one smart move from a tangential competitor, and you see yourself scrambling to remain on your feet.
Only thinking heads will remain relevant, anytime, anywhere.
Winter is coming!
If I must say, some fintech companies may join the caravan of ‘google-battered’ businesses.
Barnes and Noble, the behemoth of the offline book selling business could not take Amazon out of the online book selling market many years ago, because Jeff Bezos focused on “Customer Obsession”.
There is room to challenge the giant and win, if you deliver a Unique Value, like a better customer experience.
“Barnes and Noble, the behemoth of the offline book selling” – NOT sure if this statement is correct. BN was never an online behemoth. It was Amazon which pioneered online book selling. Check it again.
The problem with fintech and Google is this: if Android has a payment layer, it can abstract other apps since when you want to pay, Android or Chrome browser will detect and connect you to use them. While will I need to open an app if Android has the payment later? Why would I open another website when Chrome has the layer? In other words, the customer experience paradigm favours Google which owns the platforms.
But the biggest: Google can waive ALL fees and feed on adverts. People can take such to save money! This is a huge threat.