Bank of Montreal has signed a deal with Google to offer digital chequing accounts in the U.S. through Google Pay, the technology giant’s mobile payment app, as banks increasingly cozy up to Silicon Valley to head off the threat of digital disruption.
Toronto-based BMO is one of six banks and two credit unions to join an initiative that Google, a subsidiary of Alphabet Inc., launched last November, when it offered accounts with Citigroup Inc. and Stanford Federal Credit Union.
The digital chequing accounts, designed to be managed from a smartphone, will rely on BMO’s banking infrastructure and qualify for deposit insurance. BMO has already launched its own digital chequing accounts across the U.S., which helped it boost its U.S. deposits by 9 per cent last year. But the bank is turning to Google, with its massive reach, to improve its rate of growth.
"Google Pay allows us to reach new customers and extend the BMO brand more broadly through a platform that helps customers make real financial progress," said Ernie Johannson, BMO's group head of North American personal and business banking, in a news release.
The user interface for the accounts will be made by Google, and a BMO news release suggests it intends to offer customers financial insights and budgeting tools through Google Pay. The partnership allows Google to lean on banks’ reputation for stability and reliability and could give the technology giant greater access to a trove of financial data generated by bank customers.
BMO and Google have not provided a launch date for the new accounts nor released financial or operational details about the partnership.
Technology companies such as Google, Facebook Inc. and Amazon.com Inc. are keen to draw customers deeper into their ecosystems so they can glean insights about behaviour, personalize their products and sell ads more effectively. Rather than take on the regulatory and balance sheet burden of being a bank, however, they have struck partnerships with prominent banks.
Toronto-Dominion Bank offers Amazon-branded credit cards with Mastercard, and investment bank Goldman Sachs Group has launched a credit card with Apple Inc. in an attempt to build a retail banking arm.
Google chose BMO because it is "well-respected" and has proven its ability to deliver digital financial services, according to a statement from vice-president of payments ecosystems Felix Lin.
The other banks that have signed on to provide chequing accounts through Google Pay are Bank Mobile, BBVA USA, Coastal Community Bank, First Independence Bank and SEFCU, a credit union.
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