The pandemic is turning into a financial crisis that’s fast tracking the power of technology companies where today Amazon has its highest stock market valuation ever, in the heart of covid-19 deaths in the United States.
As China leads the world in blockchain patents, China’s digital currency should launch before Facebook’s Libra in late 2020.
With lowering demand for advertising, companies like Google are fast tracking their plans to mimic Apple with a smart physical debit card. While Apple and Google are working on ways to help the world automate contact tracing, by building a smart debit card Google has the opportunity to unlock new streams of revenue and data. The idea that technology companies are the banks of tomorrow is coming closer with each month.
Project Cache: Google Aims to be a Bank of Tomorrow
Google Pay has never been something as ubiquitous as Apple Pay but in an era where the pandemic is stimulating E-commerce, automation, grocery delivery and an increasingly smart Voice-AI interface for consumers, Google wants a piece of the action.
Google is working on physical and virtual debit cards that could participate in the post coronavirus economy in interesting ways. The story was first reported by the Wall Street Journal. Google is calling the project “Cache,” and it’ll partner with banks and credit unions to offer the checking accounts, with the banks handling all financial and compliance activities related to the accounts.
Google’s card would connect to an app and allow the user to purchase things either using the card, their phone, or going online. Like the Apple app, Google’s will give the user an easy way to see activity on their account. A smart debit card and checking accounts could pave the way for Google offering banking, stock brokerage, financial advice or robo-advising, accounting, insurance or lending.
The success of apps like Robinhood and payment services like Stripe are showing that Google and Facebook are not as innovative as they could be in the Fin-tech space. It’s unclear how dominant companies like Amazon and Apple will eventually be in the financial services space.
While Google will be seeking to put its financial institution partners much more front-and-center for its customers than other tech companies have perhaps done with their financial products, it’s just a step in the game of these technology companies to eventually disrupt banks and financial institutions.
While common sense would indicate Amazon has the best end-game potential in this regard, Apple, Facebook and Google are doing their best to remain relevant in their own respective attempts to innovate.
Google will essentially be leaning on banks to provide the infrastructure while taking some of the friction out of the overall banking experience. With a drop in high-margin advertising profits, Google is aggressively seeking new ways to make additional revenue while adding convenience for consumers online.
While Facebook’s stablecoins of Libra show more promise, Google is showing it’s taking more Apple’s approach to harvesting the financial data of its users. Google will soon offer checking accounts to consumers, becoming the latest Silicon Valley heavyweight to push into finance.
The coronavirus event is a huge boon for tech companies that can fast track how they disrupt new industries and become even more powerful monopolies in the cold tech war against China and its own dynasty of heavyweight tech firms.
Google is essentially following Amazon and Facebook into a “FinTech everywhere” reality that will just become the new normal. This while banks like JP Morgan scramble with R&D to become technology companies as fast as BigTech are becoming financial services players.
Apple launched its Apple Card in August, offering a slickly designed titanium Mastercard credit card backed by Goldman Sachs. Alphabet is used to being second best and given Apple’s global dominance in wearables it’s hard seeing Google gaining as many users in this regard in a world of PayPal, Square and successful FinTech startups maturing, such as Revolut launching in the U.S.
Google launching a smart debit card isn’t surprising, but it may actually be too late. Google already offers Google Pay, and its Google Wallet product has hosted some features beyond simple payments tracking, including the ability to send money between individuals. But how would Google compete vs. Venmo, Square’s Cash App or even Zelle? Apple already charges minimal customer fees, comes with a virtual card for use through Apple Pay and generates interest.
There’s no guarantee the Google card will actually launch, but if it does, privacy will naturally be a big area of concern here. Google teaming up with Apple to automate contact tracing is already controversial at the privacy front.
While the coronavirus has slowed down antitrust investigations on Google, it’s still likely public enemy (FTC) number one. Google’s history of privacy invasion via data harvesting is highly problematic for the trust of consumers.
All of these factors suggest Google is likely to be a failure in the FinTech, payments and digital banking space. Apple Pay now accounts for 5% of global card transactions, and is forecast to hit 10% by 2024, according to Bernstein research. Google can hope to get a smaller market share and still help boost revenue, but it won’t be a major player here.