By Ray Birch
PALO ALTO, Calif.–Stanford FCU was looking to offer its members a “unique experience” when it partnered with Google in a pilot of a new checking product in 2019.
But with the tech giant announcing the pilot would not move to market, SFCU CEO Joan Opp said her $3.5-billion organization will be ready if Google re-enters the checking space or embarks on other projects, and is firmly committed to working with fintechs to move the credit union into the future.
“First and foremost, I want to point out, Google is a key SEG of Stanford FCU,” Opp said. “Behind Stanford, Google is the next-largest company where our accounts originate. We serve a lot of Googlers. Although the initiative was complex, we were attracted to the digital experience Google was striving to create.”
Google’s headquarters is located approximately eight miles from Stanford FCU’s offices.
Citibank, which had 400,000 customers lined up for the account, was among the 11 FIs in the pilot. State Employees FCU, Albany, N.Y., was the only other credit union participating in the pilot.
Research conducted by Cornerstone Advisors found nearly one in five consumers said they would have opened a Google Plex account when it launched. Among Apple Pay and Google Pay users, 33% said they would open an account, Cornerstone Advisors reported.
Unique Offering
Opp emphasized that if what was eventually coined “Plex” was successful, the product would have been unique in the market.
“And we would have loved to offer the experience to our members and acquire more members from our SEG targets through the channel,” Opp stated. “Google is very good at user experience and if we could have matched a unique user experience with our products and services, we wanted to do it.”
While Stanford FCU announced it would be part of the Google pilot in November of 2019, the credit union never opened any Plex accounts. But Opp said the credit union learned a great deal from the partnership.
“SFCU has partnered with several fintech companies, and although Google is large, this was in a sense a fintech partnership,” she said. “Our environment is always more complex than fintechs realize. Not related to this project, but I can’t tell you how many times I’ve heard, ‘No problem, we have an API and can integrate’ from a fintech. However, it is always more complicated than that as our skeletons are complex. As such, the journey is always interesting.”
Opp said that as part of the Google partnership Stanford had ongoing discussions about a number of initiatives.
“We learned a lot and will use some of those learnings in future products we deploy or partnerships we engage in,” said Opp, adding the credit union was “disappointed” with Google’s decision not to move forward with its offering.
“We did have regular and ongoing communications with Google and appreciated the transparency in the partnership,” Opp stated. “But through this pilot we deepened a very important partnership. And, more importantly, we learned a lot and we will be utilizing the learnings to evolve our products and service delivery.”
Google Exits Checking
Opp said Stanford FCU will be right in line if Google returns to this market space in some form in the future.
“I do not believe Google will be embarking on another checking effort, but they will continue to evolve payment strategies and partner with financial institutions,” said Opp, who believes Google was serious about entering the checking market when it introduced the effort in 2020. “We would welcome the opportunity to work with them again in the future.”
The Wall Street Journal earlier reported sources had told it that Bill Ready, who was leading the project at Google, was “concerned that Plex could make other banks think that Google was out to compete with them since it played a lead role in building the product.”
A Google spokesperson told the Journal the company would shift its focus to “delivering digital enablement for banks and other financial services providers rather than us serving as the provider of these services.”
Analysts have suggested the reason Google dropped the project is it wants to provide cloud services to many of the largest banks and the competitive checking offering would have been a hindrance.
Seeking Partners
For its part, Opp stressed Stanford FCU continues to look for partners that will help it evolve or enhance payments and digital transactions.
Experts have stated that with a checking account from Google, the credit union’s digital account opening process would have had to be very strong.
“SFCU has digital account opening and we open over 50% of our accounts through online channels,” Opp explained. “We will be using the work we have been doing in preparation for Plex to enhance our native online account opening process. I think it is crucial for FIs to have a robust online account opening process.”
Joan Opp
Opp said credit unions have no choice but to explore fintech partnerships.
“I think from a service and functionality standpoint, CUs will need to partner with fintechs or be left behind,” Opp asserted. “We already do a lot of it as an industry. For example, SFCU was the first—with another financial institution—to integrate TransferWise, which is now known as Wise, in our online banking for quick, low-cost international money transfers. This was a fintech partnership. There are lots of examples. Partnerships that evolve the way we do business should be seriously considered.”
A Frequent Question
Partnering with Google on the project has led to a frequent question for the credit union, specifically, whether the new checking relationship meant it would be expanding its field of membership to anyone who used Google.
“We had this question asked of us many times,” Opp said. “We had no intention of attempting a charter that looked like that, so I am not sure whether it was a real possibility or not. Our objective the entire time was to reach more members in our SEG targets—Stanford and the technology companies in Silicon Valley that we serve who have employees across the U.S.”
No Regrets
The credit union’s field of membership is the Stanford community—students, faculty, staff, alumni, Stanford Hospital and Lucile Packard Children’s Hospital—as well as hundreds of other companies focused primarily in the technology space in Palo Alto, such as Google, Facebook, Tesla, VMware, and others.
“I will tell you that despite the Google initiative not making it to launch, I’d do it all over again,” said Opp. “Technology is complex and not everything that is contemplated gets completed—innovation is often messy, but when successful, it changes the way we do things moving forward.”