Fintechs now account for 40% of new banking relationships, up from only 29% three years ago. That’s according to latest annual Curinos US Shopper Survey, which also revealed that only three brands – CashApp, PayPal and Chime – accounted for fully 60% of all new fintech and direct-bank relationships.
Chime has performed well over the last few years because it’s been a leader in providing early paycheck access and its overdraft/NSF policies are more customer-friendly. But the surprising emergence of CashApp and PayPal as primary-checking providers should be a cause for concern for traditional banks and credit unions.
Consumers choosing fintechs are largely from the mass market, so they generally have lower deposit balances and are less profitable. But financial institutions can ill afford to cede the mass market because, collectively, it helps pay for the expensive branch and technology infrastructure required to support all segments.