“We are the Borg. Your biological and technological distinctiveness will be added to our own. Resistance is futile.”
Now, I would never be mistaken for a Trekker, but there are some lines from the series that everyone of a certain age knows and this is one of them.
As a veteran of the mobile payment wars, I quickly learned the bête noire of merchants and banks is a clunky term better suited for the classroom than the boardroom: disintermediation. In the case of mobile payments, that term describes the case where a competitor cuts you off from your valued customers using a shiny object as bait. And no one cranks out shinier objects than Google. Now, Google is rolling out Plex, a digital bank account in Google Pay that will be offered by a variety of banks and credit unions.
American Banker reports that both Citigroup and Seattle Bank have partnered with Google Pay in an attempt to capture Gen Z and Millennial customers. (Google has said it’s partnering with 11 financial institutions.) So, is this a deal with the devil or a match made in heaven? Like so many things, this is a case of “you pays your money and you takes your choice.”
On the one hand, banks like Citi and Seattle Bank see the partnership with Google as an opportunity to create scale, find new customers and grow into other products. Or, as the CEO of Seattle Bank put it, it’s a chance “[t]o meet digital consumers where they are (on their smartphone), to reach a new market segment of digital-first consumers, and to move fast and at low cost with strong security.” Banks like Seattle and Citi don’t fear disintermediation because they believe that their brands are strong enough to remain primary with their customers and that there is enough room on the field for a number of competitors to play.
Others are not so sure that such partnerships aren’t just capitulation and a digital coup de grâce delivered by Google in the competition for data. According to Todd H. Baker, a senior fellow at Columbia University’s Richman Center for Business, Law & Public Policy: “What Google really wants to do is capture your information for everything, and this is the one piece they don't have . . . [Google] get[s] to see payment, spending and savings behavior. Google gets what it wants and maybe it's OK financially for the banks, but in the long term it's disintermediating them from the experience. It feels a little bit like surrender.”
Will banks live long and prosper with Google Pay? The answer is written in the stars.