Author: Tom Stinton
PSD2 is here and with it the Open Banking that allows every one of us to give third-parties access to our bank accounts. Open Banking is a significant opportunity for big tech companies to build a transformative digital banking solution. So, what sort of banking experience could Google offer us?
With the arrival of Open Banking, I’ve been thinking about what a Google Bank might look like. I’ve been looking at how Google could take advantage of the wealth of knowledge it already has about us to offer some unique and extremely useful banking services.
Once simply a search engine, Google is now a key part of our lives. Google Maps tells us how best to get where we’re going. YouTube helps us find out how to do things. Gmail looks after our communications. Google Photo stores our memories. Google Drive stores our work. Google Home and Google Now, with their smart assistants, tell us everything we need to know, with Google Home also helping us manage our environment. Then there’s Google’s smartphone, along with its Android operating system that runs not only smartphones but also tablets, smartwatches and TVs.
While I’ve not mentioned every single Google product here – this really is just the tip of the iceberg – I think I’ve demonstrated how Google has become part of nearly every corner of our lives. More importantly, everywhere that Google engages with us, it is learning more about us: our behaviours, our likes and dislikes, the services we depend on and more. This unique insight is what could make a Google Bank truly transformative.
A new type of bank
Google Bank, should it come to fruition, has the potential to become a bank as we have never seen before. It could, firstly, make use of Google’s voice interface to engage with us more naturally. More than that, it could make use of its artificial intelligence and machine learning know-how to not only offer useful features but offer them exactly when we need them. Here are some examples.
With our permission, Google Bank would be able to aggregate the transaction history from across our current accounts and analyse that data to make tailored recommendations. Those recommendations could also take into account other insights it has about us – for example from our Gmail emails: “Hey Jane, do you realise how much you’ve been spending on chocolate and biscuits in your online shop? Cutting down won’t just help your bank account to become healthier, it will help you with your diet too!”
When Google Maps sees we’re approaching our favourite stores when we’re out and about, Google Bank could react to help us manage our money better: “Hey Sam, your bank balance is getting a bit low at the moment and its another week until payday. Why not give that tool shop a miss this time? You’ve been spending quite a lot on gadgets recently.”
Or it could help us save money on regular payments, particularly when it spots a Gmail that shows we have a contract coming to an end. “Hey Peter, your broadband deal is coming to an end. Would you like to know how other suppliers’ deals compare with what you’re paying at the moment?”.
Google Bank’s business model
You may be asking yourself how Google Bank would make money.
Take our contract ending example. Google Bank could take a referral fee if you transfer to another provider, just as comparison websites do now. It could also take a fee for payment transactions, as Paypal and other payment services providers do.
Google Bank could also draw some income by providing some basic money advise services for free and then offering more advanced services based on a regular subscription.
I’m sure other business models will come to light as Open Banking matures.
A bank or banking service?
Before I finish, let’s take a look at whether Google Bank could become our main banking services provider without actually becoming a bank – by that I mean without having to bear the overhead of gaining a banking licence or offering its customers a current account.
With Open Banking the answer is clearly “Yes”.
Open Banking means you can give Google permission to access your current accounts, to both view information about those accounts and to make payments from them.
So, you could give Google access to all your current accounts where it would be able to analyse your transaction history and make direct payments as a banking services provider. And with Google already providing the two-factor authentication through its Google Authenticator app, it already has the tools needed to ensure its banking services are safe and secure.
But while Google would not need a banking license, it would be regulated by the FCA here in the UK.
With PSD2 we are entering a very exciting era for digital banking. Will your bank become one of the key players or will it simply slip into the background and allow the new players to take a bigger slice of the pie?