OBSERVATIONS FROM THE FINTECH SNARK TANK
A recent study from Cornerstone Advisors highlighted the growth of digital banks and fintechs like Chime, PayPal, and Square—and the decline of megabanks like Bank of America, JPMorgan Chase, and Wells Fargo—as consumers’ choices of primary checking account providers.
Since 2020, the percentage of Americans whose primary checking account is with a digital bank has skyrocketed. More than a quarter of Gen Zers (21 to 26 years old) and nearly a third of Millennials (27 to 41) now call a digital bank their primary checking account provider. Among Gen Xers (42 to 56), that percentage grew from 8% to 22%.
What does the cornerstone data on primary checking account status tell the industry?
- Digital banks aren’t the “challenger” banks, anymore. They won. More Gen Zers and Millennials call a digital bank their primary checking account provider than those that consider a community bank or a credit union to be their primary checking account provider—combined.
- Consumers are looking for a different kind of account. It’s inaccurate to call what the digital providers offer “checking accounts.” They’re more like mashups from what have traditionally been separate accounts. CashApp, for example, provides crypto and tax prep capabilities built into the service—features typically not found in the traditional checking account.
Across 13 leading challenger banks tracked by Cornerstone, the number of active accounts at the fintechs grew 43% throughout 2021, from 27.3 million to 39.1 million. Together, Chime and Current accounted for nearly half—45%—of the total increase.
Chime is Still the Leading Challenger Bank…
When Cornerstone sized the online bank market in early 2021, Chime was the leader—by far—with more 12 million customers. Roll the clock forward a year, and Chime is still on top with more than 14.5 million customers, a 21% year-over-year increase.