Experts have lauded Google‘s decision to offer checking accounts by next year, noting that the service could assist Deposit Money Banks (DMBs) looking to attract more deposits from the general public, as reported by New Telegraph.
Why this matters: According to Bloomberg, the banking industry in the US has been recording slow growth in deposits. However, financial experts like Betsy Graseck of Morgan Stanley described Google’s efforts as a good business decision capable of delivering great value to corporate customers.
Slowing growth: The deposit growth in the United States has not been friendly, especially for U.S Banks which recorded a 2.2% decline last year. Their major competitors are digital-only banks which offer better interest rates to customers in order to guarantee their savings.
Aware of the ongoing trend, Citigroup reorganized its operations and went on to launch a national digital bank for the purpose of attracting more consumer deposits. It also went in search of the mastermind of this successful process, Anand Selva to head the new digital bank.
Anand Selva has quite a reputation. He was poached from Citigroup’s operations in Asia where he orchestrated partnerships with consumer companies including Paytm, India’s largest payments platform, and Grab, the ride-hailing app in Southeast Asia.
His experience in Asia is currently needed at the new digital bank. Citigroup is harping on Selva to deliver following its new partnership with Google to deliver this new banking feature.
In an attempt to examine how banks will utilise Google’s new offerings, Graseck is of the opinion that Alphabet Inc.’s Google will be utilised in taking on new customers.
“Kind of like how airlines act as an account acquisition tool for credit cards,” Graseck said.
“This is not attaching your current checking account to Google Pay. It must be a new checking account,” she added.
However, Graseck noted that several customers were confident in Google’s decision to bank with them.
It can be recalled that Google expressed intentions to provide financial solutions to its customers by offering checking accounts by 2020. It also disclosed that a partnership deal had been struck with Citigroup and a credit union at Stanford University to make it work.