Google’s move away from bank accounts shows why finance is a tough industry for tech giants


The Google Pay logo displayed on a phone screen.

Jakub Porzycki | NurPhoto via Getty Images

At least one tech giant has decided it is better to serve the banks rather than take them head on.

Google is shutting down its bank account product almost two years after announcing ambitious plans to tackle the retail finance industry. A key factor: The new head of the company, Bill Ready, has decided he would rather develop a digital banking and payments ecosystem than compete with the banks, according to a person with knowledge of the decision.

In recent years, bank executives and investors have shuddered whenever a tech giant has revealed plans to break into finance. For good reason: Tech giants have access to hundreds of millions of users and their data, as well as a history of transforming industries like media and advertising.

But the reality has proven to be less disruptive so far. While Amazon reportedly explored bank accounts in 2018, the project has yet to materialize. Uber limited its fintech ambitions last year. Facebook was forced to rename its crypto project amid a series of setbacks.

“We are updating our approach to focus primarily on providing digital empowerment to banks and other financial service providers rather than serving as a provider of those services,” a Google spokesperson said in a statement.

Google, which is owned by parent company Alphabet, could help banks provide consumers with safer ways to shop online, for example through virtual cards or single-use tokens. This is according to the person knowing the company who refused to be identified when talking about business strategy. These methods reduce fraud by protecting users’ credit card numbers.

Google may have finally decided that it wasn’t worth upset current and potential customers for its various businesses, including cloud computing, according to a Friday research note from Wells Fargo banking analyst Mike. Mayo.

In recent years, Google has funneled more resources into its cloud business, which still lags behind Amazon and Microsoft in terms of market share. However, it has made steady gains under cloud boss Thomas Kurian, who, along with Google CEO Sundar Pichai, has repeatedly touted financial services as a target in terms of the customers they hope to attract.

“The banks are worried about disintermediation, and I think it’s likely that Google executives have received signals that the banks were not okay with what Google was going to do,” said Peter Wannemacher , Forrester Research analyst who advises banks on digital efforts. “They made the bet that there was a greater gain by selling to banks rather than selling to customers.”

Being the customer-facing entity for the banks may have risked inviting further scrutiny from regulation and Congress, he said. As it stands, the public has already become suspicious of the reach of tech companies, he added.

“Financial services are a difficult space to enter,” said Wannemacher. “Everyone knows that, but it’s often more upsetting and gnarly than people expect.”

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