OBSERVATIONS FROM THE FINTECH SNARK TANK
A new study from Cornerstone Advisors,1 looking at who Americans have their primary checking accounts with, underscores 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. What’s going on in the checking account market?
1) The percentage of Americans whose primary checking account is with a digital bank has skyrocketed since 2020. 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), the percentage who have their primary account with a digital bank grew from 8% to 22%. Overall, six in 10 Gen Zers and Millennials whose primary checking account is with a digital bank has that account with Chime, PayPal, or Cash App.
2) Megabanks’ primary customer share is plummeting. As recently as two years ago, the megabanks—Bank of America, JPMorgan Chase, and Wells Fargo—dominated consumers’ primary checking account assignments. Since the start of the pandemic, however, the percentage of Gen Zers whose primary checking account is with a megabank has dropped from 35% to 25%. Among Millennials and Gen Xers, the percentages declined by nearly a half.
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3) Community banks are making a comeback. Bucking the trend, community banks gained share in primary checking account status across four generational segments (no, that wasn’t a typo, and yes, I double-checked the numbers).