Stanford Federal Credit Union CEO Speaks Out on Google Partnership

Palo Alto, Calif.-based Stanford Federal Credit Union made headlines recently after announcing plans to offer Google-powered “smart checking” accounts, and for Joan Opp, who is Stanford Federal Credit Union’s president and CEO, the move is as strategic as it is technological.

The accounts, which should be available sometime next year, will be co-branded and part of Google Pay Services, according to the credit union’s announcement. Google will deliver the interface and Stanford Federal Credit Union, which has $2.9 billion in assets and about 72,000 members, will house the account.

“We serve a lot of Google employees, and as Google was developing their vision for this product, they reached out to us with interest in being a lead partner on the initiative. And we were excited to do so. We think it fits very well with our visions,” Opp told CU Times.

Although the accounts will operate through Google’s app, the credit union isn’t ditching its own mobile app and its branch strategy likely won’t change much, Opp explained.

“We have always been low brick-and-mortar and high digital going back decades, and that continues to be our model,” she said. “Our members and potential members are high-tech people and they prefer digital interaction and expect high-digital capability. And so this is just another step toward those objectives that we’ve always had.”

Whether and to what extent the new account will cannibalize the credit union’s other offerings is uncertain, however.

“We have a number of accounts, and every time we have a new account there may be members that choose a new account over an existing account. So that certainly is a possibility. From our perspective, we want to have multiple options for our members and our future members. And if this is an option they want, we want to be able to provide it,” Opp said.

Data Security Key Consideration

“Certainly data and data privacy is a big issue that’s in the headlines every day. I would start by saying anybody that’s using Google Pay or Apple Pay, that data is already there anyway,” she said. “That transaction data for any of those payments, the provider already has. So I see this as being an extension of that mechanics, although with this type of account there will be more data. But it will be specific to that account and any consumer that opens that account. The co-branding will be part of the terms and conditions. And somebody that doesn’t want that type of account won’t open that type of account.”

The credit union may bear some liability risk should Google somehow breach perceived responsibilities with data, Opp conceded.

“But that’s no different than a long list of partners we already work with today,” she added.

“We share data with our online banking provider because you can’t have an online banking provider without the data. And we have the same expectations of any partner we have, and we review that security protocol…we have that risk with a long list of vendors today, as does every other financial institution in the country. So I look at it no different, quite frankly. I think the key is transparency in the data and how the data is being used. I think Google’s committed to that transparency, as are we.”

What it Means for Credit Unions

The partnership shouldn’t necessarily warrant a hair-on-fire reaction from credit union executives, according to Steve Williams, who is president of Scottsdale, Ariz.-based credit union consulting firm Cornerstone Advisors.

“It’s just another competitor added in a very crowded market,” Williams told CU Times. “I don’t think it’s a ‘game-changer,’ but I think it’s another indication that the battlefield for consumer deposits and payments is really more of in a mobile-first environment than it is in traditional banking. I don’t think this means there’s a sudden swing in market share to the tech companies. But I just think over time, there’s going to be hundreds of competitive use cases like this, trying to take a piece of traditional banking. I think it just keeps putting pressure on traditional institutions to say, are we allocating enough resources and focus to a mobile-first banking kind of paradigm?”

Opp also didn’t view the new partnership as an existential threat.

“I feel pretty strongly that financial institutions need to seek out strategic partners to continue to meet consumer expectations. We don’t have the resources to develop the user experience that our partners do. We seek out partners in online banking as an industry, and I look at this as being very similar,” she said. “So Google is not the bank here, if you will. We hold the account. We are the depository.”

“Again, I think it’s a strategic partnership that we feel helps us achieve our goals of giving our members the type of functionality that they want or will want, and that excites us,” she said.