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August 31, 2007

Google as a Bank

The Economist compares Google with a bank that stores and manages a lot of information (some of it, personal information).

"Google is often compared to Microsoft (another enemy, incidentally); but its evolution is actually closer to that of the banking industry. Just as financial institutions grew to become repositories of people's money, and thus guardians of private information about their finances, Google is now turning into a custodian of a far wider and more intimate range of information about individuals. Yes, this applies also to rivals such as Yahoo! and Microsoft. But Google, through the sheer speed with which it accumulates the treasure of information, will be the one to test the limits of what society can tolerate." (my emphasis)

As with any bank, you need to trust it, to make sure it has transparent policies, that it serves your interests and it doesn't have "hidden costs". Your ISP, your doctor, your employee, your bank - all have a lot of personal information about you and some of it could migrate to online services like Google Health, Google Checkout, Google Web History or Google Web Accelerator. The worst thing that can happen to Google is losing the trust of its users, so Google has another incentive to not betray peoples, besides the mythical "Don't be evil" corporate motto.

The Economist thinks that Google should find the right balance between users' privacy and storing personal data indefinitely. Google already does a good job at explaining the consequences of your actions and how could some options affect your privacy, but it would be nice to expand the Web History to a big personal center that shows all the information Google has about you and provides ways to remove or export some of the information.

"Google in effect controls a dial that, as it sells ever more services to you, could move in two directions. Set to one side, Google could voluntarily destroy very quickly any user data that it collects. That would assure privacy, but it would limit Google's profits from selling to advertisers information about what you are doing, and make those services less useful. If the dial is set to the other side and Google hangs on to the information, the services will be more useful, but some dreadful intrusions into privacy could occur. The answer, as with banks in the past, must lie somewhere in the middle; and the right point for the dial is likely to change, as circumstances change."

{ The second photo illustration: "At last!", licensed as Creative Commons. }

Google as a personal assistant
Google, Behind the Screen (documentary)


  1. besides the mythical "Don't be evil" corporate motto.

    Mythical? Is that saying the moto is mythyical or the concept of not being evil is mythical?

  2. Word sense disambiguation.

    The motto is mythical.

    mythical = related to a myth

    myth = A popular belief or story that has become associated with a person, institution, or occurrence, especially one considered to illustrate a cultural ideal: a star whose fame turned her into a myth; the pioneer myth of suburbia (definition from The American Heritage® Dictionary of the English Language via

  3. you don't know how happy i am that you read the economist!

  4. Why doesn't Google become a bank?

    In these day's of financial woes for the entire system why doesn't Google (or another software savvy reputable multi-national corporation) not just offer banking services suitable for the modern era?

    What I (read: me, personally) would like to see is a credit union style affair where everyone with an account is a shareholder in the bank. One online account for each person with proof of id from pasport number / national insurance or other government id. The main account should be a current account with optional for "folders" to act as savings accounts where your money would be safer and earn preferential rates. There should be no offices / branches / unnecessary expenses, no overdraft facilities and debit cards only for a fixed (small) fee. Standing orders and direct debits should be charged at the cost to implement (hopefully nothing!)

    Borrowers should be means-assessed by a proper means assessor - for small loans this could be done online and larger loans a visit will have to be scheduled to gain an accurate measure of the market value of the asset being purchased. There should be a fee for a loan application proportional to the size of the loan - this will pay for the assessors and minimise the costs of running the bank. Interest should be charged on the shortest sensible timespan (per day?) so that there is an incentive to repay as soon as possible. No fixed interest rates - what happens, happens.

    All profits from loans made by the bank should be divided equally among the shareholders and transferred minus costs on a weekly basis.

    Google accounts should also permit transfer of money into all major currencies at the latest possible exchange rates and money should be accessible globally.

    There should be a way to budget in your accounts so that planned budgeting can be compared easily with actual money.

    The website should be super secure, and provide all users with up to the minute and historical data for total funds, total loans, total costs and the interest rate ao all is open and accountable.

    Overall, what I would like to see is a new bank (not necessarily aligned in any way with google, but they do do some neat programming) that need not pay incredible interest rates but is open, honest and decent about looking after my money, does not waste money on stupid ivory towers and golden handshakes, invests it in reasonable projects and returns to me any rewards from the investments. That would be a new paradigm in Consumer banking and one the world could do with badly.

    - RH

    PS I've intentionally omitted the entire business banking sector. The need for physical cash movements and assessing higher risks using net present value is too much to fit into this post!

  5. The motto is not mythical. All though it is not the actual motto of the company, it is not mythically associated to them. Do your research people...'t_be_evil

    By the way... PLEASE SUPPORT WIKIPEDIA!!!!

  6. I have also suggested to Google that they consider setting a banking system ( GoogleBank) that could be engineered to provide electronic banking of the higest standard to their "community". Money that normally takes a long time to transfer and that attracts unreasonable fees could be instantly transferred to put it to work for the GBank account holder.Search for the right investment oppertunities could be
    provided via the Google network as well as advice, "green" rating and other investor parameters. As the above comment suggests there is no need for phyical infrastructure and the subsequent overheads that the "old" banking system grew to see as a necessity. I would also see GBank as providing an efficient way to allow the wealthier goups in the world community to assist directly the less well off by being able to pledge and deliver funds to provide assistance. A micro cedit system, education investment facility and green development support investment mechanisims are all possibilities.
    Money managed on the basis of "do no evil" could represent one of the most significant changes to the health of the tiny globe and its occupants since man first began to enguage in trade.

  7. Great post I would like to thank you for the efforts you have made in writing this interesting and knowledgeable article.


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