Google, Walgreens, H & R Block want to be your bank | Business

When thinking about Google, Walgreens, or H & R Block, what probably comes to mind is searching the web or prescribing without having to write checks, build emergency funds, or set up automatic billing payments. It’s about receiving and paying taxes. However, these companies are part of the growth trend of non-bank brands that provide banking services.

By making banking services available, retailers, brokerage firms, and other companies have another way to engage with their customers with the goal of building loyalty and keeping them in the ecosystem longer. Provide. For customers, it not only means convenience and a better technical experience, but can also mean additional costs and potential for confusion.

For the sake of clarity, these companies are not really banks. Francisco Alvarez-Evangelista, a research associate at financial services analytics firm Aite Group, said that this would require a bank charter, which could be time consuming and costly, and the company is subject to additional regulatory investigations. It states that it will be.

Instead, they partner with existing chartered and regulated banks to provide federal insurance for their customers’ deposits. Partner banks handle regulatory and security responsibilities and actually manage checks, savings and other accounts, while companies focus on branding, marketing and customer engagement.

nonbanks Banking services from Google

Announced in late 2020 and scheduled to roll out this year, the popular “Plex” account is a mobile-first checking account that integrates directly into the Google Pay app. Google has partnerships with about 10 financial institutions, from major national banks to regional banks and credit unions, allowing customers to choose which financial institution to open an account with.

With Google’s extensive reach and vast data collection capabilities, consumers may be wondering if or how technology giants will use banking and transaction information from their Plex accounts. .. However, according to the company, such data is private.

“We take the privacy of our financial information very seriously and take a privacy-focused approach to Google Pay,” said Josh Woodward, Head of Product Management at Google Pay, in an email. “Google Pay does not sell data to third parties or share transaction history with other Google to target ads.”

Walgreens

Walgreens announced in March that it would partner with MetaBank to open a bank account in late 2021. The pharmacy chain said in a news release that it would come with a debit card and that accounts covered by the Federal Deposit Insurance Corporation through MetaBank would complement current services and enhance loyalty programs and customer personalization. According to the company, customers will be able to sign up not only online but also in stores.

H & R block

The tax preparation chain has extended the capabilities of the H & R Block Emerald Prepaid Mastercard account beyond simply loading tax refunds. Issued in partnership with MetaBank, this card allows customers to make purchases, receive direct deposits, share funds with partners, withdraw cash, pay invoices and perform other cash management tasks. There are fees for some card services, such as cash reloads and ATM withdrawals.

Potential strengths and weaknesses

Accounts supported by these brands may appeal to consumers for several reasons. inside that:

Familiarity: For example, if you’re using Google Pay for purchases, or the Walgreens app for shopping or prescription replenishment, you can manage your bank account using a familiar interface. If you have an H & R block card because your refund has been loaded, you can live a more financial life through it. User experience. Bank apps and websites are always very user friendly. More consumer-oriented companies may be able to leverage their technological talents to create a better user experience than traditional banks.

There are also the following risks and potential downsides:

Cost: It may not be comparative shopping when you sign up for a bank account because it is integrated with the app you use. If you have interest on your deposit, it may be relatively low, or the fee you pay for the service may be relatively high. Currently, interest rates are fairly low overall, but there are still some institutions that can offer higher than average interest rates. Affiliated banks. Your money will eventually be held by a partner bank, which is the bank’s policies and procedures that can determine if your account meets your needs. If you run into problems, you may be dealing with bank customer service rather than branding, which may not be the best experience.

Alvarez-Evangelista states that it is in the company’s interest to partner with a bank that offers excellent service. From a brand perspective, “the biggest risk is reputation,” he says. “If one of these programs fails or fails to meet consumer expectations, the retailer will be associated with it.”

The article about Google, Walgreens, and H & R Block wanting to be your bank was originally published in Nerd Wallet.

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