Many Stanford students might know the Stanford Federal Credit Union (SFCU) for its incentive-based “recruit a friend” links that spread via Facebook. However, the credit union is now receiving national media attention for its partnership with Google’s quiet new financial technology project: Google Cache checking accounts. In 2020 the credit union will be one of two banking institutions — the other being the much larger Citigroup — piloting Google-provided checking accounts in a move that some see as the next step in Google’s “consumer dominance.”
In an interview with the Wall Street Journal, Google executive Caesar Sengupta M.S. ’01 said that the relatively small Stanford Federal Credit Union, which will roll out the new accounts within the next year, was chosen by Google due to the fact that is used by many Google employees. Sengupta himself opened his first bank account in America with the credit union as a computer science graduate student at Stanford, and says he knows coworkers who still bank there. The SFCU has seven ATMs on Google’s campus and has two bankers assigned only to Google employees.
Traditional checking accounts are known for easy deposits and withdrawals but that comes at the expense of an array of fees and close to nonexistent interest rates. According to the Wall Street Journal, Google’s checking accounts are unlikely to deviate much from this tried-and-tested formula.
The accounts will not be branded with the Google name, and Google will not in any way handle the financial and compliance activities of the accounts — those responsibilities will be left to the banks and credit unions. Sengupta confirmed that Google lacks the licenses or even the desire to take over banking responsibilities.
“Our approach is going to be to partner deeply with banks and the financial system — it may be the slightly longer path, but it’s more sustainable,” he said.
Instead of offering a fundamentally different product with its Cache checking accounts, Google will make subtle improvements around the edges.
Sengupta told the Wall Street Journal that such improvements could include integration into the Google Pay app and loyalty programs for individuals, merchants and banks. Sengupta also raised the possibility that Google checking accounts may not charge fees or charge less than existing standard rates. SFCU President and CEO Joan Opp expressed enthusiasm about these improvements in a statement on their website.
“We are excited to partner with Google to bring new, mobile-first experiences to our members,” the statement reads. “Credit unions across the country can benefit from this type of innovative partnership by providing better tools for their members to lead healthy financial lives, all while differentiating with their brand, products and local presence.”
In exchange for the Google accounts’ benefits, the tech giant will gain access to a treasure trove of users’ financial and transaction information. Google would learn how much money users make as well as how and where they spend their money. The data would be a powerful addition to what the company already collects from search, email and devices like phones and home speakers. According to Sengupta, this financial data would be used completely within Google and would never be sold to or shared with advertisers under any circumstances.
Google expects its checking accounts program will be extended to other banking institutions in the future.
Contact Cooper Veit at cveit ‘at’ stanford.edu.