Google’s pivot away from bank accounts shows why finance is a tough industry for tech giants

The Google Pay logo appears on the phone’s screen.

Jakub Porzaiki | NurPhoto via Getty Images

At least one technology giant has decided that it is better to serve the bank than to take their head.

Google is shutting down its bank account products almost two years after announcing ambitious plans to take over the retail financing industry. One key point: Bill Reddy, the new head of business, has decided that he will develop a digital banking and payment ecosystem instead of competing with banks, according to a person familiar with the decision.

Over the past few years, bank executives and investors have been stunned whenever a technology giant unveils plans to enter finance. For good reason: tech giants have a track record of accessing millions of users and transforming their data and industries like media and advertising.

But the reality has so far proved less disruptive. Although Amazon searched the bank accounts in 2018, the project has not yet been implemented. Uber relied on its fintech ambitions last year. In the wake of one setback, Facebook was forced to rebrand its crypto project.

A Google spokesman said in a statement: “We are updating our vision to focus primarily on providing digital capabilities to banks and other financial services providers rather than acting as providers of these services.”

The parent company Alphabet can help provide consumers with a more secure way to shop online, such as Google, Virtual Card or Single Use Token. This is according to the knowledgeable person of the company who refused to identify to talk about business strategy. These methods reduce fraud by securing users’ credit card numbers.

According to a research paper by Wells Fargo banking analyst Mike Mayo on Friday, Google has finally decided that it is not worthwhile to compete with existing and potential customers for its various businesses, including cloud computing.

In recent years, Google has created more resources for its cloud business, which still lags behind Amazon and Microsoft in market share. However, it has gained stability under cloud boss Thomas Kurian, who has repeatedly referred to financial services as a goal in the eyes of customers, along with Google CEO Sundar Pichai.

“Banks are worried about sterilization, and I think maybe Google executives were getting signals that the bank wasn’t doing what Google was going to do,” said Peter Onemaker, a Forrester research analyst. “They bet there was more profit to be made in selling to the bank than to selling to customers.”

He said it would be risky for the bank to invite more regulators and congressional scrutiny as it is a customer-oriented entity. He added that the public has already become skeptical about the reach of technology companies.

“Financial services are a tough place to access,” Wanemachar said. “Everyone knows it, but it’s often more annoying and messy than people expect.”

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