Google is teaming up with six more banks to support its efforts to offer digital checking and savings accounts to US Google Pay users beginning in 2021. New partners — BankMobile, BBVA USA, BMO Harris, Coastal Community Bank, First Independence Bank, and SEFCU — will join Citigroup and small lender Stanford Federal Credit Union, which Google announced as partners in November 2019. Google will craft the front-end user experiences of the digital banking services it provides, while its FDIC-backed bank partners will hold the accounts behind those services.
Neobanks that tend to downplay sponsor banks in favor of pushing their own brand, Google will cobrand its banking services with its partners. Here’s how that will be a boon for all parties. Firms that will take the biggest hit if Google is able to launch a successful digital banking play will be digitally native neobanks. Challenger banks’ strength lies in their technological savvy, which they are leveraging to draw in customers and gain scale, although profitability remains a significant challenge.
Neobanks end up in direct competition with a big tech company like Google — which has scale, profitability, and vast technological prowess — they will be robbed of that advantage, endangering their future prospects. Another hazard will be that as Google works to create in-demand digital banking features, it will likely look to popular neobanks’ features for inspiration, releasing its own versions and reducing the competitive uniqueness of those features.