Google-BBVA Partnership Marks A Tipping Point For Big Tech In Banking – Forbes

For several years bankers have publicly worried about what would happen if the big tech companies — the Facebook, Amazon, Google, Microsoft, Apple — moved into banking.

It’s been happening, in a subdued way. True to predictions, the tech companies based in the Wild West have shown no appetite to become actual banks, with the heavy oversight, intrusive regulation and slow pace of change that might entail.

Instead, they are working with bank partners who already have the regulatory practices in place. BBVA USA, formerly BBVA Compass, has announced that it is

collaborating with Google to offer consumers a digital bank account through Google Pay.

“BBVA will offer interested consumers digital bank accounts through Google Pay. Customers will benefit from Google’s ability to build great customer experiences, BBVA capitalizes on its innovative capabilities,” the company said in its announcment.

BBVA, a global technology leader in banking, said partnering with Google will enable organic growth across the U.S.

“When we launched our new 5-year strategic plan in January, we said that two key pillars were to reach more customers with our digital offerings and use our expertise in finance, digital and innovation to help them improve their financial health,” said BBVA USA president and CEO Javier Rodríguez Soler. “This collaboration with Google is fully aligned with this effort – even more so in today’s world where the ability to conduct your financial life in a digital manner, from account opening to transacting to understanding financial health, is an imperative,” he said.

“Collaborations with companies like Google represent the future of banking. Consumers end up the true winners when finance and big tech work together for their benefit.”

Details are sparse, but it appears that Google will offer a front end to BBVA’s modern digital core banking platform developed with Accenture. Last year Google announced partnerships with Citi and the Stanford Federal Credit Union. In addition to BBVA it is working with Bank Mobile, BMO Harris, Coastal Community Bank, First Independence Bank and SEFCU.

“The tipping point is happening,” said Alyson Clarke, principal analyst with Forrester. “The future is here. Google is launching a marketplace for banking, and all of those 8 or so banks and credit unions they announced are going to be part of it.”

Details have not been announced, but she expects that Google will build account opening, like a mobile banking environment.

“As a customer I go in and pick the products, such as checking or saving through an amplified Google Pay platform. On the back end, the bank owns the product and moves the money, but the customer interaction is on the front end that Google is building.”

That has big implications for bank branding, which she thinks will become less important to consumers.

“Whilst it looks like co-branding, will customers see the brand and care, or will they go to the marketplace and see which bank or credit union has the best interest rate and go with it?”

Banks will wind up competing on price and fees, she added.

“Customers will feel they are getting the value from Google through financial management management tools, budgeting, rewards program, and incentives to use Google Pay.”

The bank will still own the customer, but Google will probably have access to the customer data, she said. Google wants the data it can obtain from an eco system of banks and merchants because the data supports its advertising sales and gives them data they can sell back to merchants to support merchant reward programs, for example.

“These offerings are enablers to other things, not to become a bank.”

For banks, the advantage is that the tech companies have built, and constantly refine, their front end systems. By partnering, banks get access to the latest without having to invest in sophisticated customer interfaces. That does, however, require a shift in thinking for bankers who like to build and control their entire technology platform.