As open banking hits UK is it time to dispel the Google Bank theory?

On writing a news article about Google bringing its different payments services under a single brand I couldn’t help revisiting that all so often theory of Google Bank.

This week Google put services including Android Pay and Google Play under a single Google Pay brand.

Like Uber Google has become a default name for digital disruption in industries. But Google, the internet giant, has even been talked of as a potential bank.

But I doubt Google and for that matter any internet giant would want to be a bank. Many of these internet companies experience symptoms ranging from mild headaches to huge migraines when it comes to regulation that questions the stability or morality of their business models. The audacity of that, all they want to do make people’s lives easier. Errr, and make money.

Banks will say the same thing these days as digital banking accelerates. But there is a huge difference between banks and internet companies and tech startups when it comes to regulation.

So despite the term Google Bank often cited as the future (I am guilty of this) is it really going to happen?

One of my contacts, a senior IT professional in the UK banking sector and a keen advocate of digital challengers, thinks Google will cherry pick. “I think Google will do anything in financial services that will generate revenue without the need to meet heavy regulations,” he said.

The new fully fledged banks which have entered the UK since the government made getting a banking licence easier, many of which are driven by digital technology, still had to jump through lots of hoops to get approval.

So if Google wants to do more on the fringes of banking the new rules which come into force next week around the Competition Markets Authority’s Open Banking rules in the UK and PSD2 across Europe could be an opportunity. These regulations, which become law this weekend, will force banks to share customer data, if the customer agrees, to enable other companies to offer services using this data.

For instance a company could offer an app that puts all you financial services from multiple companies in a single financial management platform. Or a comparison company could use the information to offer recommendations about financial products that better suit a consumer.

According to Ovum analyst David Bannister: “PSD2 and the CMA’s Open Banking changes the nature of banking. At the moment you have all of your financial m services roughly with one bank. You are not getting any advice from high street banks. The new regulation allows a whole range of advisory applications, consumer advice generally, offers and things like that all in one place. That changes your consumer or even small business relationship with a bank.

So this is right down Google’s street surely? But Gartner analyst Alistair Newton, said Google usually ranks low when it comes to trust around financial services. “I think Google as a financial services aggregator would struggle in terms of the data we have. They fall well down the list in terms of consumer trust in banking. Many people don’t trust what Google is doing with their data.

He said Amazon is a more likely company to grow in financial services. “People trust them because they keep delivering stuff to their front doors. This is the kind of thing that builds trust.”