Google abandons plan to offer bank accounts to users



[ad_1]

Google is dropping plans to offer bank accounts to its users, marking a step back from its efforts to make the tech giant a bigger name in finance.

The alphabet Inc.

GOOG 2.67%

the unit announced nearly two years ago that users of its Google Pay digital wallet could sign up for enhanced checking accounts and debit cards at a handful of financial institutions large and small, including Citigroup Inc.

VS 2.07%

and Stanford Federal Credit Union.

The new offerings, called Plex Accounts, would sync with Google Pay, carry both the Google and the bank’s branding, and provide a digital dashboard showing where and how users have spent and saved. Plex was introduced as a new way to do banking, with an emphasis on simplicity and financial well-being and with no monthly fees or overdraft fees.

The project was originally slated to debut in 2020. A series of missed deadlines, as well as the departure in April of the head of Google Pay who championed the project, prompted Google to unplug Plex, people familiar with the matter said.

A Google spokesperson said the company would now focus primarily on “providing digital empowerment to banks and other financial service providers rather than serving us as a provider of those services.”

Google has embarked on financial products alongside a number of Silicon Valley giants seeking to deepen their ties with their legions of customers. Amazon.com Inc.

considered offering checking accounts. Apple Inc.

issued a credit card associated with the iPhone. Facebook Inc.

announced that it would create a new cryptocurrency that would facilitate money transfers and trading.

Many of these expansion plans have stalled. Amazon never moved forward with its current account proposal, and Facebook showcased its crypto campaign after regulators around the world objected and partners fled.

For smaller banks, the appeal of doing business with Google was access to the digital know-how of its engineers and its large, tech-savvy user base. Small banks don’t have the funds to build the kind of feature-rich smartphone apps their bigger rivals are offering and their customers want. Plex could level the playing field.

For Citigroup, Plex was meant to help overcome a relatively small brick and mortar presence. (JPMorgan Chase & Co., America’s largest bank, has about seven times as many branches in the United States as Citigroup.) Jane Fraser, who headed Citigroup’s consumer division before becoming CEO earlier this year, has emerged in a promotional video for Plex. “It’s even a little fun,” she said.

A Citigroup spokeswoman said the bank plans to offer other accounts to potential customers who have signed up on the Plex waitlist. The bank, she said, would look for other ways to work with Google in the future.

Citigroup was adding around 10,000 people per week to the waiting list, which had grown to around 400,000, proving executives that the strategy was viable, according to a person familiar with the matter.

The coronavirus pandemic has bothered Plex. Last November, Google announced that it had signed more banks, including BMO Harris and the Black-owned Harbor Bank of Maryland.,

and would start opening accounts in 2021.

The architect of the Plex project, Caesar Sengupta, left Google in April. Bill Ready, a PayPal Holdings alumnus Inc.

executive who joined Google just over a year earlier to run its e-commerce operations, has taken over and charted a new course, people familiar with the matter said. Mr Ready was concerned that Plex might trick other banks into believing that Google was ready to compete with them because it played a leading role in creating the product, one of the people said.

Banking regulators backed Plex and played no part in its demise, people familiar with the matter said. Still, Google has informed regulators that it is not moving forward with the product before notifying all of its banking partners, some people said.

As recently as this week, several banks felt the project was still moving forward. Monday, BM Technologies Inc.

said its Plex accounts would arrive in late 2021 or 2022. “Google and BMTX are excited about this opportunity and are committed to this partnership,” the banking platform said in an email at the time.

Write to Peter Rudegeair at [email protected], David Benoit at [email protected] and Andrew Ackerman at [email protected]

Copyright © 2021 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

[ad_2]

Source link