A new partnership between Google and Stanford Federal Credit Union could spur the industry to do some soul searching on how it handles fields of membership.
Google is working with the Palo Alto, Calif.-based credit union along with Citigroup to offer a consumer checking account next year through Google Pay. The deal is seen as a boon for Stanford and could help the institution boost its membership.
But unlike banks, credit unions face limits on who they can serve given restrictions related to field of membership. That could force credit unions that enter into these partnerships to rethink their charters or how they define their fields of membership.
“[T]his is a seminal, market defining announcement for the entire credit union movement,” said Richard Crone, CEO of the advisory firm Crone Consulting. “The key here is applying a new interpretation of a credit union’s reach through SEGs within their FOM.”
At first glance, it may seem odd for a tech behemoth like Google to bother working with a comparatively smaller credit union. Most of these deals are struck with large banks, such as Goldman Sachs working with Apple on the Apple Card.
But the $2.9 billion-asset Stanford was able to land the deal with Google because it already serves the tech giant’s employees. It also has long been known as an innovator. For instance, it was the first financial institution to complete an electronic transfer online in the 1980s.
Google “wanted to…