Google Plex: what impact does this have on the financial services industry?
In reaction to the recent announcement of Google Plex, Marcell King was interviewed by staff writer Rimal Farrukh from Teasheet for this article: What Google’s foray into banking means for incumbent and challenger banks.
We’ve noticed that Google has been dabbling in banking related services for several years now, including card payments, P2P, Google Pay, and bill pay (remember Pony Express in 2015). From a Google perspective, Plex is a great play because it enables Google to get even more personal data on consumers, specifically their banking data, which has traditionally sat behind the firewalls of bank’s and credit union’s core data systems.
With personal bank transaction data, Google can now match the data to a person’s browsing history, email, tasks, and more in order to create a completely personalized experience, helping consumers manage their money more efficiently, and delivering truly personalized offers from consumers financial institutions and retailers.
For instance, if a consumer is looking at new homes through Zillow, Google could trigger a suite of personalized mortgage financing offers that will perfectly fit their budget because Google already has data on the consumer’s monthly recurring deposits, savings accounts, loans, bills and spending habits. When closing on the house, Google is able to push ads or offers to make sure the consumer buys new furnishings at the lowest cost possible. This is an extremely powerful tool!
Google Pay’s Plex accounts are going to have a significant impact on the industry, not only on financial institutions but it’ll also impact the core processor and independent digital banking providers who power the digital experiences for most of the institutions in the country. Google’s play is all about the data and how the data can be used to allow the FI to drive a personalized digital finance user experience and how the data can be monetized for Google, their partner financial institutions, and the retailers who advertise through Google. Legacy digital banking systems are not built to use data to accommodate personalization at the user level. They’re built either as cookie cutter systems that allow for custom styling (logo add, color palette, button styles, fonts and font sizes) or they’re built to allow complete customization at the FI level. In either case, the user experience is generally static and it’ll be very difficult for FI’s to compete on the digital front if they’re only delivering account balances, transaction history, and transactional services like bill pay and transfers when Google is using a data driven approach to drive capabilities and offers. They have the technology and the horsepower to use that data in very powerful ways.
Big tech finance players do trigger impact on traditional banks and fintechs. Banks have always had a difficult time using data to the benefit of their customers and their institutions. Big tech finance players have built their technology infrastructure to leverage data from day one. They have immense understanding of the consumer’s preferences, feelings, likes and dislikes, demographic, geographic, and sociographic attributes. Tying this data together with detail about an individual’s financial capacity, the bills they pay and their spending behavior down to the merchant and merchant’s location, what they purchased and when they purchased, will allow big tech finance players to know more about the individual than the individual knows about themself. Banks and credit unions who adopt a data driven approach to offering personalized user experiences and products will win in the long run.