Hi everyone,Tom here. This week I am covering Google branching out to banking and how Starling will beat Monzo and Revolut to the post to become the first profitable UK challenger bank. Also, I want to hear what you think. Would you bank with Google? Let me know in the comments!
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Story of the Week 📝
Google signs up six more partners for its digital banking platform coming to Google Pay - TechCrunch
Photo by Mika Baumeister on UnsplashGoogle’s long-rumoured foray into banking looks like it’s finally coming to fruition. Although the big tech corporation is not planning to create a full-on bank experience à la Monzo, the firm will expand the capabilities of its Google Pay function in the US.
This will be done by partnering with US banks to offer checking and savings accounts. Whilst the banking accounts will be managed by the institutions themselves, Google will take over the consumer-facing front-end i.e. what you see when you open the bank app.UK digital bank users along with Japanese Line Pay fanatics and Chinese WePay customers are already used to seeing their financial spending habits categorised within the app. In a similar way, Google is planning to offer such services with financial insights and other budgeting tools.
However, Google is a company that is known for collecting an enormous amount of data on us. For example, a 2016 move saw the company combine personal information in Google accounts with browsing on non-Google websites. This was done largely without customer consent.
Thus, there are many questions that need to be answered surrounding the kind of data that the search conglomerate will collect and how it will be used when we hand over our financial information to them.
Read of the Week📚
As Monzo flounders, arch rival Starling Bank is set to make a profit - WiredIn a boon to the UK digital bank scene, Starling Bank is set to make a profit. This would make it the first app-bank to break even, very admirable considering the economic situation that the pandemic has thrust upon us.
The Monzo rival has done this by offering government-back Coronavirus loans and an older customer base than Monzo or Revolut who tend to spend locally rather than internationally. This meant that they were less reliant on international fees. Moreover, it has a strong business account customer base meaning that its revenue is skewed towards small businesses or freelancers rather than consumers.
This has resulted in the fintech bank largely avoiding the coronavirus apocalpyse that the UK fintech scene has experienced. Not only is it on track to turn a profit, it also eyes international expansion along with hiring more employees.
In Case You Missed It 💨
Under lockdown, Generation X turning ‘to buy now pay later’, says Klarna - AltFiLast month’s long read covered fashion’s underreported relationship with fintech. In particular, Pay-Later services like Klarna and their complicity in the working conditions of Boohoo’s factories.In turns out that these Pay-Later services have expanded during lockdown with the usually Millenial-focused service reaching the Gen X demographic. Moreover, Klarna services are already available in-store and further international expansion is on the cards. As pointed out by the above-linked article, when you use this service you are actually taking out a small loan through a streamlined process. Klarna has become one of Europe’s most valuable fintech unicorns through marketing credit to already debt-heavy Millenials. This re-branding of debt under fintech is something to be incredibly wary of as the fintech unicorn expands globally.
See you next Monday,Tom Matsuda