Fintech banking options are not an immediate threat to incumbents, but their innovative features represent a long-term challenge to standard U.S. banking practices. Much like how Robinhood’s commission-free approach to stock trading became standard practice in the brokerage industry, many of its value-added features could catch on.
Banks of all types and sizes must stay abreast of movements from tech-forward challengers reimagining digital banking through mobile-first platforms, lest they be left behind when differentiating features become standard. The latest report from Corporate Insight looks outside the standard coverage group, examining nine fintech banking options to highlight standout features and identify major functionality gaps in their offerings.
Fintech banking options differentiate with unique feature but omit some basic functionality
The offerings assessed all share the same basic features—standard FDIC coverage on balances, debit cards for everyday spending and account numbers for paying bills—with minimal fees. None require a minimum balance, and only Acorns charges a monthly fee. Fintechs differentiate these basic offerings with some combination of innovative account features and strong digital platforms:
- Betterment and SoFi offer cash management accounts with increased FDIC coverage through sweep programs with partner banks, and they reimburse ATM operator fees worldwide
- Chime and Varo provide early access to paycheck direct deposits and cover overdrafts without charging a fee for clients who meet certain criteria
Almost every option assessed supports some form of savings tool; many facilitate incremental, automatic savings with purchase roundups, while others allow clients to set aside money in subaccounts. Three firms confer additional value to their clients through exclusive benefits, partner offers and cashback earning opportunities.
While these fintech banking options differentiate with a variety of unique features and benefits, most omit key functionality common among incumbents.
- Monzo and Revolut suffer the largest gaps, as they lack authenticated sites entirely and rely on their mobile apps to engage with clients.
- SoFi alone allows clients to order paper checks for their accounts, and only five firms support mobile check deposit, although some plan to add this staple feature soon
- Digital card replacement is also uncommon, with just four firms supporting the feature, despite all offering temporary card locking
Research reveals key findings about fintech banking experience
Our report identifies several key findings regarding fintech banking options and their influence on incumbents’ offerings:
- Fintechs reimagine banking with innovative offerings that provide value through increased FDIC coverage, ATM operator fee reimbursements and minimal account fees
- Early availability of direct deposits and fee-free overdraft coverage add flexibility and convenience for clients in need of financial breathing room
- Fintech banking options support savings with allocation tools and automatic funding options that include incremental purchase roundups
- Exclusive benefits and cashback earning opportunities incent everyday spending
- Fintech banking options lack many basic and advanced features that are standard, or at least common, among incumbents
Subscribers can access the full report—on how innovative fintech banking options are spurring industry incumbents to improve their digital user experience—on our client portal. For access, or for more competitive intelligence on the user experience that banks provide to their customers, check out Corporate Insight’s Bank Monitor research service offerings.
