OBSERVATIONS FROM THE FINTECH SNARK TANK
They say Nero fiddled while Rome burned, and that may be an apt analogy for today’s banks.
According to a study from Cornerstone Advisors, just 20% of bank executives think online (or digital) banks are a significant competitive threat.
They might want to rethink that.
A July 2020 survey of US consumers from Cornerstone Advisors found that 14.2 million Americans—6% of US adults with a checking account—now consider a digital bank to be their primary bank—a 67% jump from January 2020.
Chime leads the fintech pack with more than 4.3 million consumers calling it their primary bank, followed by Dave with just shy of 3 million primary bank customers.
To put that in perspective, based on number of primary bank customers, Chime is now a top 10 bank in the US.
These numbers don’t even account for all of these fintech firms’ customers.
According to Cornerstone’s study, 35% of Americans have two or more checking accounts. Among those consumers, 15% call an online bank’s account their secondary account.
Winners and Losers in the Online Bank Insurgency
Among US consumers who opened a checking account during the spike of the Coronavirus crisis, 18% did so with a digital bank. That’s up from the 6% who last opened an account two to three years ago.
Digital bank founders love to talk about how dissatisfied consumers are with the big banks. Someone needs to tell the consumers.
While the digital banks made huge gains in primary bank status during the first half of 2020, they’ve done so predominantly at the expense of community banks and credit unions.
Combined, these latter two categories of financial institutions accounted for just 10% of checking accounts opened in Q2 2020— down from 28% of those who opened their last account three or more years ago.
Among the large banks, JPMorgan Chase and Wells Fargo both saw a 7% decline in their number of primary customers. The numbers at Bank of America, however, are through the roof. Since January, the bank has added nearly 9 million new primary bank customers—a 21% increase.
Online Bank Demographics
Not surprisingly, digital bank customers are younger than customers of other types of financial institutions. Surprisingly, perhaps, is that only a little more than…
Read More: The Online Bank Insurgency Of 2020