Author: Simon Cadbury
Google announces new payment service and mortgage comparison tool
It has been an exciting period for Google’s fintech developments.
In February, it announced a payments service which will allow customers to settle debts and transfer funds via Gmail by simply clicking on a “£” icon in the email and entering the amount. Then, just this week, the internet giant launched its free mortgage calculator enabling consumers to compare mortgages from different finance firms on the Google browser.
These are just the latest in a string of financial tools developed by Google since its launch of Google Checkout in 2006. So what does its future hold in this sector? Is it realistic to talk about a Google Bank?
Google – threat or industry enabler?
For a number of years now, surveys have consistently shown that decision makers in banks feel web companies, such as Google, pose the biggest threat to their business. More recently, in an interview last week, Ana Botin, chairwoman of Banco Santander explained the bank is closely monitoring tech companies such as Google and is focused on beating off competition from these companies “intent on invading its territory”.
However, rather than a competitor, Google should be seen by banks as an enabler in the industry.
Internet firms act as a support to financial services
In a report published last year titled “Why Google Bank Won’t Happen”, analyst firm Forrester explained that due to costs, strict regulation and the important ad revenue from banks, internet firms are better placed to take on a support role in financial services than to become a provider. These firms can improve the relationship between banks and their customers by offering payment services, financial advice, and product comparisons.
Our own research showed significant consumer appetite for a Google payments service before plans were announced by the firm. The survey revealed Google is the brand consumers would most like to use as a payments service, beating the likes of Facebook and Twitter, with 23% of respondents voting for it. Of those who chose Google, 40% said it was because they trusted the brand.
Improving the future of digital banking technology
It’s clear consumers respect Google as a creator of financial tools. Google therefore has an important role to play in the industry. The firm can build on this trust and use its prominent position as one of the most disruptive and innovative brands in the world to improve customer service in the industry. By pushing the boundaries of innovation, Google will encourage banks to do the same or to partner with it on future developments. Moreover, by offering new tools, Google will help to push banks to up their game in terms of the digital products and services they provide.
Banks should not fear Google. Rather, as Forrester analyst Oliwia Berdak put it, they should “observe Google’s next moves, learn from its best practices and consider any partnership”.