蘑菇AV

UK-based neobanks Monzo and Revolut give banks examples to follow. Both offer a free tier and several paid ones with clear price points. Instead of being product-focused, these tiers offer an array of features that aim to simplify customers鈥� financial management, such as account aggregation and custom spending categories. Giving customers more flexibility and control ultimately benefits banks.

With their respective commerce media network announcements in spring 2024, Chase and PayPal joined buy now, pay later (BNPL) fintech Klarna and neobank Revolut in the burgeoning world of FMNs. Financial services companies boast their cross-merchant, holistic view of consumer spending behavior as a key differentiator to advertisers.

The service advances Block鈥檚 goal of 鈥渂anking our base鈥� and could drive Cash App adoption.

A smaller percentage of Gen Zers and millennials considered digital and neobanks as their primary FI in 2024 than in 2023. And half of the banking customers who opened new checking accounts in 2024 already had at least two other checking accounts. This could mean customers are opening new accounts to sample specific digital tools鈥攂ut never fully switch to them.

Our third annual study reveals which account opening features US consumers value most, based on our exclusive survey.鈥�

Competition from Neobanks and Fintechs: European banks see neobanks as their biggest competitors. To counter this, many traditional banks are investing in fintech startups and building their own digital banks.

Neobanks and banking-adjacent apps are crowding out general-purpose prepaid cards. Players like Cash App are attracting consumers who had previously relied on prepaid cards to make non-cash purchases and pay bills. 蘑菇AV 23 million US adults use digital-only banks, per our forecast.

Championed by neobanks including Revolut and Current, this format offers banking products like debit cards and savings accounts. Teen accounts are linked to parents鈥� accounts, giving them oversight and control of their teen鈥檚 spending. This maintains guardrails while giving teens some independence. Teen banking rolled into existing apps.

Neobanks, buy now, pay later providers, and incumbent banks should model on Intuit鈥檚 tool if it proves successful. Part of that success will depend on how Intuit addresses consumer data privacy concerns. Consumer and merchant adoption of genAI-powered chatbots will open new revenue doors for payment providers.

Despite the popularity of tech-forward neobanks in the UK, customers lag in their adoption of AI bank chatbots. Widespread reliance on phone service and regulators鈥� worries about security vulnerabilities have inhibited uptake. By the end of 2026, 27.6% of UK adults will use bank chatbots.

The reception: Internally, the bank reports a fourfold increase in customer engagement compared to US digital-only banks, based on per-client deposits and product subscriptions. That鈥檚 likely because Berkshire鈥檚 perks are successfully incentivizing both. Key takeaways: Berkshire鈥檚 marketing strategy has incorporated some unique perks that could be attractive to its  target market鈥擥en Zers.

The experience and brand presence that Wall Street lenders are able to offer savers is a major competitive advantage over neobanks and fintechs, especially after recent regional bank failures. The speed and ease with which consumers can open accounts is crucial.

Some neobanks have achieved profitability, but many are still going through fundraising rounds. But the venture capital for these new fintechs dropped 42% in 2024, per The Financial Brand. This would be a good time for FIs to launch highly targeted digital products for Gen Zers and win a larger share of new customers.

Many will favor digital-only accounts: We expect Gen Z digital-only bank account holders to almost triple between 2020 and 2023鈥攁nd their total will more than double to 10.0 million between now and 2026. Focusing on digital commerce can help debit providers boost Gen Z's debit usage. Debit is capturing over one-third of online purchase volume as customers embrace the tech online.

Neobanks face their own set of challenges. The number of US neobank account holders will continue to climb by 46.4% between 2022 and 2026, according to our 鈥淣别辞产补苍办蝉 Confront Uncertainty鈥� report. But as VC dries up, neobanks will struggle to keep up with the incentives, low fees, and innovative products customers have come to expect.

Smaller groups of customers with an appetite for more excitement may gravitate toward cryptocurrencies, neobank competitors, or nontraditional banking services. It looks like the right time for marketing messaging to emphasize a bank鈥檚 strong reputation and stability鈥攑articularly when targeting Gen Xers and baby boomers.

Challenger banks are also likely to feel pressure from Apple. These more specialized banks are nearing the end of their runways, like Daylight, which recently shut its doors, and Kinly, which was scooped up by competitor Greenwood. But Cornerstone Advisor analyst Ron Shevlin believes these banks should feel threatened by all players in the financial services sector. How can FIs compete?

Digital-only banks will likely never claim as many account openings as they did in 2020 and 2021 because of rising profitability struggles, declining fintech funding, and competition with other payment fintechs and Big Tech. The majority of digital-only account openings will come from Gen Zers, reaching 3.3 million between 2023 and 2027. Use this chart:.

Canadian PFM fintech Hardbacon has closed its doors, and recently acquired US neobank PrizePool is turning off its consumer app. How we got here: This trend is ongoing, but reached an inflection point when Mint shut down its app, citing an inability to make enough money, per The Cut. Many factors are creating a challenging environment for these apps:.

That will likely boost retention and should help attract new users who may have favored challenger banks鈥� superior digital services. Strengthening loyalty will also make it easier for banks to cross-sell products like credit cards, banking services, and mortgages.

Digital-only banks or those that have closed many locations should consider covering customers鈥� ATM fees, at least up to a certain threshold.

The remittance market is already flush with established competitors, including incumbents, fintechs like Wise, and neobanks like Revolut. That may mean PayPal pivots to focus on areas where it鈥檚 generating easy growth, like buy now, pay later (BNPL) and Braintree, while reinvesting money back into core areas.

ATM location: If they鈥檙e a digital-only bank or have closed lots of physical locations, they should consider covering customers鈥� ATM fees, at least up to a certain threshold. Figuring out which accounts Gen Zers gravitate toward can help FIs determine if this benefit should be universal or solely target cash-reliant consumers.