Google is the latest technology giant to reveal bank plans

Google has become the latest tech giant to announce a new financial product for users ̵[ads1]1; this time, current accounts.

The company said it plans to partner with banks and credit unions in the United States to provide "smart check" accounts.

It said the service, launched through Google Pay, will allow users to add Google's analytics tool to traditional banking products.

The move follows credit card offers, payment systems and loans from Facebook, Uber, Apple and Amazon.

While the products and events are different, the tech giants entering the banking world share an underlying motive: to make themselves indispensable, says Gerard du Toit, a partner at consulting firm Bain & Co.

"They all compete for consumer awareness and for their ecosystem and platform to win," he says.

Amazon's credit cards and business loans are aimed at increasing its e-commerce business, while Uber Money provides credit cards, debit accounts and money tracking tools to service the company's taxi business.

Facebook has said its Facebook Pay service will complement its messaging tools.

And both Google and Apple, which have teamed up with Goldman Sachs' new consumer arm, Marcus, on a credit card as part of Apple Pay and the Wallet service, want to make iPhones and Android important.

Waxing into financial services will also provide Google and Facebook information for their advertising business, and help track which ads lead to purchases, said Mr To Toit.

The transition to banking is likely to increase technology debates. giants, who are already facing probes related to competition, data protection and privacy.

Some officials have also expressed concerns about gaps in financial oversight as increasing activity occurs outside of traditional banking. And in recent days, New York announced they would be investigating Apple, after allegations that their credit card relied on "sexist" algorithms.

Mr du Toit said that regulatory concerns represent the "fly in the soup" for technology companies.

"They have to be very careful," he said.

Partnerships

In many cases, companies are working with traditional banks – a sign that they are aware of the potential problems, he said.

Google said that the US partners, which allegedly include Citigroup, would begin offering the accounts by 2020.

"We believe our partners' regulatory and financial knowledge is a great complement to our experience in building useful tools and technology for our users, "a statement said.

Lagging China

Amazon has been offering small business loans since 2011 and launching its credit card with JP Morgan Chase in 2017.

But in some ways the amount of company announcements this year is a sign that the US is late at the party.

In China and some other countries, technology companies moved quickly into banking, motivated by the need to fill the gaps left by the traditional financial industry that created barriers to their businesses, whether they were e-commerce or food supply companies.

However, the need was less urgent in the United States, partly thanks to the scale of credit cards and other "good enough solutions," Mr. To Toit said.

Big tech payment services provided by Alibaba & # 39; s Ant Financial and Tencent & # 39; s WeChat account for approximately 16% of China's GDP, compared with less than 1% in the United States, according to Bank for International Settlements, an organization supported by 60 of the world's central banks.

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Tech companies "are getting more and more into it now because they think they can offer a significantly better solution to customers," he said.

Last month, Facebook boss Mark Zuckerberg raised the threat of Chinese competition while defending the company's interest in developing a cryptocurrency before Congress last month. [19659007] "I see the US economic infrastructure as outdated," he said.

& # 39; Darwinian Experiment & # 39;

As technology companies begin to take advantage of their vast reach, close customer relationships and gigantic data sets, banks. "has woken up" to the threat, which led to cooperation and other troubled "frenemic" schemes, said Mr To Toit.

With technology companies moving beyond credit cards, regional banks will be left behind, while lesser financial technology and firms will be forced out or acquired, Mr. Du Toit said.

"I sometimes describe this as a giant Darwinian experiment with different banks and big technological links," he says. "There will be some mutations that succeed and others that fail."

While Google's previous efforts to build Google Pay were unsuccessful in gaining traction in the United States, the company has developed significant payments business in India, with a Bain & Co survey found that more than half of respondents had used the platform during for the past 12 months.

"I wouldn't count them out," said Mr Du Toit.