What might motivate Google to become a bank down the road? As bank robber Willie Sutton is famously misquoted as saying, “Because that's where the money is.”
While officially Google has been a bank since 2007 (holding a De Nederlandsche Bank license) it's a license to offer digital banking services, which isn't quite what we're talking about here.
To be clear, I have no inside information that Google is about to take on Bank of America, but as we watch them spread into new sectors like a Beiber sighting on Twitter, one has to consider if this isn't in their long-term plans.
Would they do a better job than the current banks do? They couldn't do worse. But what's in it for them? And for you?
For Google to be successful as a bank they would have to meet two criteria: they must benefit, and you must benefit. While many of the benefits are cross-dependent, we'll focus first on how Google might benefit from becoming a bank and then discuss how business owners and consumers would.
What's In It For Google?
There's a long list of advantages for Google in becoming a bank but let's focus on the top five. They are:
- Increased value for AdWords ads: One big problem many local businesses (and some national) who invest in AdWords face is not being able to properly track their conversions if the sale is made offline. Not so if Google payment solutions from credit cards to debit cards are used. The idea of mobile payments is coming in the form of Google Wallet – allowing consumers to simply swipe their phone over a scanner. The big hurdle to this? Most phones don't support NFC (Near Field Communication). However Google's sway with hardware manufacturers and their control over Android should reduce this barrier and make the implementation and adoption of this technology much easier.
- The power of the coupon just got better: We've all used a coupon at some point and many SEW readers (dare I say most?) have used a Groupon. Let's take that one step further and attach that coupon to your payment method. No coupon to carry around for you and no codes for the business to spend a few minutes (during peek hours) confirming that your coupon is valid and hasn't been redeemed yet. This is one of the biggest issues that businesses have with Groupon and Google Offers could easily settle it if only Google was a bank.
- Further diversification of revenue streams: The obvious benefit is having more money generated from more revenue streams. Were Google a bank they would have a larger holding of capital (always good) and additional access to revenue from many (though likely not all) of the revenue streams available to banks such as interest. Somehow I can't see them charging service fees, but I also can't imagine them offering the variety of services that would allow for many of those fees to be charged.
- Data: Every second of every day Google is collecting data. In efforts to gather more of it Google has spent tens of millions of dollars providing users with products that do little more than provide Google with data and another advertising stream. But so far they only collect the data you give them with your clicks and pageviews and profile setups. One has to wonder, what could they do with your purchase and banking history? Do you think that perhaps their ability to target ads might get even sharper if they knew everything you spent your money on? I've always appreciated Facebook's ability to serve me ads based on my interests but even these are my public interests, those that I'm willing to share with all my friends, family, co-workers, clients and other SEOs. If Google knew not just that, but also what I spend my money on in real life their ability to advertise not just to what I'm searching for but what they know I'm likely to buy would dramatically increase their AdWords clickthroughs.
And if Google wants to know whether I +1 a location, why not just assume I do to any location that I frequent multiple times. And not just websites, but locations.
- Android and Chrome usage increases: As noted above, Google loves data. If they can tie your life to your phone and make it cheaper and more efficient for you to use their data-collection products such as Android and Chrome via the seamless integration of payments, they will further enhance their advertising abilities, which will make them more money to lend via credit cards and enhance their advertising revenue further. And even if you don't use these products, you will spend more of your online time signed into your Google account, sending them your data as you are.
The list could go on and on. Readers, please leave a comment below with your thoughts on additional benefits (or downsides).
But as I promised above, this isn't just about Google. For a Google bank to work there have to be benefits to consumers as well as businesses.
What's In It For You?
Now the question becomes, how would Google becoming a bank benefit you? Individual benefits differ from business, so let's look at three of the benefits for each group. Since not all our readers are businesses but all are individuals, let's start there.
Benefits To Individuals
- Ease: Every day we look for convenience, ways to trim just a few seconds off the tasks we like least. With full integration of your online and offline worlds the product you looked at from home could be flagged on your account, accessible from your phone or credit/debit card, called up when you got to the store, paid for and coupon applied all while trimming 2 or 3 valuable minutes from your day. And when you got back, the receipt is in your Gmail account.
- Cost savings: I like money and so do you. Since Google's primary source of revenue isn't and likely wouldn't be from banking, they don't need to create the same revenue. They could afford to charge lower fees as they're making money on both sides of the transaction and that will mean you get lower interest rates and no annual fees.
- Improved online experience: While you might not know why, giving this information to Google will make your entire online experience better. The more they know the better the ads they serve. If you purchase locally more often than online, they'll know that. If you prefer quality to price, they'll know that. And when they provide advertising to you, they'll hit the nail on the head more often than not and be able to tailor your search experience and the types of results given far more than one could even imagine with today’s data.
Benefits To Business
- Conversion tracking: As a marketer the part of this equation I'd be most excited about is the improved conversion tracking. The ability to connect the online and offline worlds reliably (or at least, more reliably) would be a giant leap forward. Further, connecting purchases to users' Google accounts would give me access to demographic data based on items purchased (if only I could connect my inventory and sales to my Google account with something like, say, Google Product Search). The benefits are only limited to what we can come up with to want to track.
- Less expensive: As the benefit is to the individual, so too does it cascade to the business. Google would be less interested in your money from interest than they are from the AdWords revenue they could capture, the coupons and other incentives you'd be more prone to offer, and the ad revenue they could get from you directly through your clicks and the improved ads they could serve to your clients should you opt to provide purchase data back to Google.
- Convenience: Business owners always need to find ways to streamline activities. How convenient would it be to have your Analytics, conversion data, paid search, payment processing, business account, credit cards, email, etc., all available with one login? Very is the short answer, and businesses will flock to this, especially the small and medium-sized ones – let's call those the vast majority.
Will Google Do It?
But will Google become a bank? Only time will tell. They've got a lot going for them already.
Google has the cash, the incentive and heck, they're already a bank in some respects. They're offering credit cards at 8.99 percent to AdWords clients and a securities lending program in the billions.
The biggest downside for Google resides in how the governmental bodies would react to such a move when they already have their eyes on Google for monopolistic tendencies in a number of countries. And you can bet that the banks themselves will put their dollars and lobbyists and donations behind any efforts to keep Google from doing so.