The Pony Express May Have Dire Consequences for FIs

Glen Sarvady July 2nd, 2015

The latest payments news from the Google camp involves the firm’s announced reboot of Android Pay and Google Wallet. I’ll defer to others to provide the specifics (the NY Times offers a nice synopsis) but I’m struck by the extent to which Apple Pay is winning the PR wars. Android Pay is being portrayed as a “me too” offering, and Google’s media relations group can’t be happy about seeing terms like “flopped,” “unsuccessful,” and “not simple” in their launch coverage.

Although details remain sketchy, Google’s more intriguing news involves the leak of a project dubbed Pony Express.

The check is in the email?

According to multiple reports, Pony Express aims to allow users to make bill payments directly from their Gmail inboxes- eliminating the need to visit biller or bank websites. If these early reports prove accurate- and they may actually be trial balloons intended to gauge market reaction- such functionality would represent quite a shot across the bow of the banking community. Meanwhile Android Pay’s features look more like hand-to-hand combat with tech competitors like Amazon and PayPal.

In my recent travels I’ve been surprised by the level of enduring FI animosity created by Google’s digital wallet foray. The firm’s initial positioning- to the effect of “Don’t worry, we’re not looking to steal your customers, we just want their data”- blew up in their faces and created an opening for the usually-feared Apple to step into the unexpected role of White Knight with its “bank-brand-forward” ApplePay positioning.

An olive branch, or a joy buzzer?

I expected Google’s next move to constitute an olive branch to the FIs- Pony Express in its current depiction would be precisely the opposite. Routine financial transactions such as bill payments and funds transfers drive the majority of bank website traffic. As visits to bank branches decline, it is more essential than ever that FIs maintain ongoing interaction with their customers via mobile and online channels. A solution like Pony Express would constitute yet another source of disintermediation between the FI and its customers.

I doubt Google is looking to adopt a bank-unfriendly stance. They need to play catch-up with Apple Pay, and their most readily apparent source of competitive advantage is the Gmail inbox. Sadly this plays into another narrative- the battle isn’t over the payment itself but rather over the information that surrounds the payment.

Consequently FIs are in danger of becoming collateral damage in a broader war among tech giants. Given its options, perhaps Google has determined it faces too steep an uphill climb with banks given Apple Pay’s market coverage. Google may be frustrated by the continuing skepticism it faces over its intentions, and made the cold calculation that there wasn’t much to lose by further alienating the FIs.

The Pony Express saga will be a fascinating one to follow leading up to its supposed Q4 launch.

This content is accurate at the time of publication and may not be updated.