Google is partnering with Citigroup and a Stanford University credit union to launch a checking account according to the WSJ.
The project, code-named ‘Cache’ aims to launch the product in 2020.
At first glance, the news represents not just a decent exclusive for the Wall Street Journal. If confirmed, the much rumoured launch by Google of a mainstream retail banking product is a decent win for Citi.
Moreover, Google plans to let Citi front the product from a branding perspective. Contrast the position with the much publicised launch of Apple’s credit card with Goldman Sachs.
It is notable also that Google is choosing to work with an incumbent banking partner such as Citi.
Google project Cache: a coup for Citi
The attraction for Citi to team up with Google is obvious. In the US, Citi has been one of the most aggressive evangelists for digital channels.
In particular, Citi was one of the first US banks to prioritise rightsizing of its branch network. As a result, it has already completed much of the heavy lifting.
The Citi branch network peaked at 1,079 units in 2008. Since then more than one in three Citi branches have closed, leaving just 711 at the end of June 2019.
Citi is now only the 15th-largest bank by branches but retains its spot as the fourth-largest US bank as measured by deposits.
By contrast, Chase, Bank of America and Wells Fargo all operate branch networks that dwarf Citi’s 711 outlets.
For example, take Chase. Its branch network peaked at 5,697 outlets as recently as 2013.
In the past six years Chase branch numbers are down by 10% to 5,024 at the end of June 2019.
At the same time as retiring branches in markets where it is strong, Chase is expanding in select markets.
In particular, Chase is expanding into nine key markets, growing its network in Greater Washington, Philadelphia and Boston.
Wells Fargo remains the largest US bank ranked by branches with 5,567 branches. In the year to end June, Wells Fargo closed over 300, about 5% of its branches.
Wells Fargo branch network peaked at 6,795 outlets in 2009 following its acquisition of Wachovia and its 3,363 branches.
Google project ‘Cache’: data concerns inevitable
Inevitably, initial comment will arise around the potential for Google to sell consumers’ financial data.
Google says that is not its intention.
The front end of the proposed current account will work via the Google Pay app. There is talk also of an associated loyalty programme.
It will however take more than yet another loyalty programme for a Citi/Google tie up to transform currently low switching rates.
Bear in mind also the much hyped Amazon/Chase story last year. There was much excitement but little sign of progress regarding news that Amazon was to launch a current account with Chase.