5 risks credit unions face by partnering with Google

The race is on as Google looks for additional banking partners for its checking product now that Citibank and Stanford Federal Credit Union are on board. But Google, along with Facebook and other big techs, are 'ad targeting machines' that could cost financial institutions dearly if they don't take steps to mitigate the risks.

The much anticipated moves by big tech firms into banking took center stage in 2019. Apple partnered with Goldman Sachs to offer a no-fee credit card embedded in the Apple Pay mobile wallet. Later, Google partnered with Citigroup and Stanford Federal Credit Union to offer checking accounts that can be accessed via the Google Pay app.

In between, Facebook announced its plans for its Libra cryptocurrency and Calibra digital wallet, followed later by several less controversial Facebook Pay enhancements. JPMorgan Chase, meanwhile, has developed an e-wallet product it is offering to Amazon, Lyft, and other e-commerce platforms.

These partnerships make strategic sense for both the tech giants and the banks. Goldman Sachs, for example, gets to grow credit card balances, accelerate loan growth, and solidify its foray into retail banking, while Apple gets to offer consumers a way to finance purchases while minimizing capital and risk exposure.

 

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