The growing use of fintech by U.S. consumers has illuminated a number of important gaps in banks’ traditional product offerings—gaps that reflect deeper, unmet financial needs.
After shoring up competitive weaknesses in their existing products, the next step for banks is filling in the gaps between those products. These gaps are opportunities for banks to be fast followers.
There are a few specific areas where banks can make up ground.
Early Wage Access. Challenger banks are gaining market share among consumers. This is true not just for consumers’ additional accounts, but for their primary accounts as well. Led by Chime with nearly 9 million customers overall, challenger banks are now the primary bank for 15.3 million Americans. These banks are offering a number of novel, nontraditional features that are highly attractive to specific customer segments. One example is providing early access to a customer’s paycheck, which was the reason that one in five Chime users opened an account with the fintech.
Automated Savings Tools. Fintech providers like Acorns, Qapital and Digit have attracted millions of users for their automated savings capabilities. According to our research, consumers save between $475 and $1,000 a year using these tools and this is above and beyond their existing level of savings, on average. While banks have historically competed for deposits through price, these fintech competitors are providing an (arguably) more valuable service for most savers, particularly in a low-rate environment.
The final step for banks, after addressing weaknesses in existing products and processes and fast-following fintech companies into addressing gaps in their existing product stacks, is to expand those product stacks. To build fundamentally new products that solve new problems for your customers.
There are plenty of opportunities to do so. In our research, we asked consumers “what is crucial to the future of your financial success?” Only 1% of the responses mentioned a “bank.” The other 99% of responses talked about problems that consumers’ wished their current banks would help them solve.
Self-driving Money. 27% of U.S. consumers (66 million) said that they would pay for a service that would automatically budget and invest their money, based on their specific financial goals and risk tolerances.
Help Earning More Money. 25% of U.S. consumers (61 million) said they would pay for a service that provided expert advice and guidance on how they could ask forearn more money at their job.
The opportunities for banks are immense. The challenge is recognizing that the competitive environment in which you operate has fundamentally changed and adjusting your strategies accordingly.
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