Last year, Google announced its new smart checking account, Cache. CitiGroup and Stanford Federal Credit Union have already partnered with Google to launch the accounts managed by users through Google Pay in an effort to increase the number of app users.
Additionally, Google’s debit card was recently leaked and is now expected to launch this year. While many of the details surrounding Google’s accounts and card have not been released yet, one thing is certain – partnering with a recognizable brand for a product is not a new concept.
The Power of Gold Labeling
In 2013, Ron Shevlin, Director of Research of Cornerstone Advisors, coined the term “gold labeling” in an article with The Financial Brand.
“The practice of white labeling — offering products developed by a third-party but branded under the distributor’s name — is common in banking,” said Shevlin. “The core premise underlying white labeling is that the distributor’s brand is stronger than the manufacturer’s. In the world of banking, this is changing. The branding power of fintech startups is creating opportunities for banks and credit unions to flip the white labeling model on its head and create the opposite: gold labeling.”
The benefit of gold labeling is in the brand that produces the products. By leveraging a national consumer brand in marketing efforts, greater awareness for the product is created and the financial institution offering the tool can gain market share.
Gold labeling gives banks and credit unions a way to offer innovative products and services that the institution may not have the resources to create on its own. These products can satisfy consumer needs by providing them a better value and experience.
A Questionable Partnership
With Google’s announcement, the topic of gold labeling comes up again. Smaller financial institutions may be looking to offer Google’s checking accounts because the brand recognition will help draw in consumers. But is Google the right partner for local banks and credit unions?
As TechCrunch reporter Josh Constine said, “Google’s strategy is to let partnered banks and credit unions provide the underlying financial infrastructure and navigate regulation while it builds smarter interfaces and user experiences. It’s foreseeable that one day Google might cut out the banks and take all the spoils for itself.”
While banks and credit unions look toward Google’s Cache project as an opportunity to offer a gold labeled product, it is important to remember Google did not invent this concept. Other organizations have successfully developed branded products and services for community financial institutions.
Look to the Mission
One of the very first companies to engage in gold labeling in the financial space is Kasasa. By offering nationally branded products, Kasasa is providing the tools needed for community banks and credit unions to compete with megabanks. Kasasa-branded products, such as loans, checking accounts and marketing services, provide consumers with great value.
Leveraging its national consumer brand, Kasasa utilizes gold labeling to provide the community banking industry with world-class marketing, dedicated resources and innovative products. With comprehensive solutions and support, Kasasa is a true partner with local banks and credit unions.
The most essential aspect of a gold label partnership is trust. The financial institution must trust the gold label partner to support them and fulfill their consumers’ needs.
These partnerships can offer the gold label partner access to the financial institution’s consumer data, and it is important that any data accessed is strictly used for bettering the financial services industry and its clients.
The Top Priority
Google’s plan to gold label checking accounts is similar to what Kasasa incepted by partnering with community financial institutions for well over a decade. While there is still little information available about Google Cache, it will be interesting to witness the company step into the banking space. Google’s checking accounts are new, but the concept of gold labeling is not. There are trusted, established gold label partners, like Kasasa, who will continue to leverage brand recognition to meet financial institutions’ and its consumers’ needs – the top priority.