Imagine a bank like Google. All financial services are completely free and funded by advertising.
The Google Principle: “pay” with your data
On a mission to make the world’s information universally accessible, many Google products like Google Search, Google Maps, and Gmail are free of charge. This is only possible with the help of advertising. Google’s main source of revenue is ads next to relevant search results on Google Search.
Imagine a free Google Bank
Imagine that Google’s principle would be applied to financial products. Banking and insurance services would be completely free of charge. Checking accounts, bank cards, asset management, and possibly even loans would be completely free and financed by advertising. Banks would use transaction data to provide you with highly tailored advertising offers, e.g., when shopping online or perusing your banking app.
Surely not everyone wants their transaction data to be used so explicitly. But I can imagine that many would be willing to let their transaction data be used in return for free banking services. Just as you give up your search data in return for a free search engine.
Extremely valuable data…
For advertisers, payment data is very valuable because there is no waste. I can target customers according to their reals needs, at the right time, with the right context, and at the right location. But for us customers, too, it would be a massive improvement in the quality of the advertising we receive.
Here is an example. Every three months I buy a 90-day pack of contact lenses online. Afterward, I always get lots of ads for contact lenses displayed because Google knows my purchase interest but not the fact that I already completed my purchase. Otherwise, Google would know that I do not need to purchase contacts for the next three months. During that phase, it is completely pointless advertising for me and the advertiser.
Someone who also has my payment details would know that I order new contact lenses every three months. They could then show me very targeted advertising when I really need it. The provider would even know the price I paid. If the contact lenses are cheaper at the local optician at that time, he could draw my attention to this offer as I walk by the shop.
For advertisers, this is a dream. It means they would pay exceptionally high prices for the data. As a consumer, I must decide how much this is worth to me. Personally, I don’t care if someone knows when and where I buy my contact lenses or at what price. But it does bother me when I am shown completely contextless and pointless advertisements.
…enabling a radical price reduction
The costs of financial services could be radically reduced. This applies to direct costs but also hidden costs such as the lack of interest on current accounts. Today, banks and insurance companies still earn far too much money. The fact that they make little profit is due to very inefficient processes compared to other sectors and the absence of any pressure to change this.
With the approach of Google Bank, where customers pay for services with their data, the cost for customers could be reduced even further. Financial services could probably be completely free, or customers could even get some money back.
Google Bank is unlikely to happen
There are certainly many people who would be interested in a free account with “Google Bank,” especially if you would even get money back for using financial services. But there are a few reasons why such a bank might have a hard time.
Some people do not want advertising and are willing to continue paying for their bank and insurance.
Many people might have reservations about sharing their data. Especially in Germany, people are paranoid when it comes to data protection. There would be a huge outcry from data protectionists. This is unbalanced considering that Google Search has one of the highest market shares in Germany.
Others also believe their bank would already be free even without advertising. Unfortunately, most customers understand too little that banks make very good money from them. The best examples are the non-interest-bearing balances on current accounts and the supposedly free brokers.