The news: A study of where US citizens are opening their checking accounts found that fintechs’ and neobanks’ market share is growing—at the expense of big incumbents like JPMorgan Chase, Bank of America, and Citibank.
That’s according to a Cornerstone Advisors report, cited in Forbes, which found that challengers and fintechs have captured 47% of all new checking accounts opened so far in 2023.
By the numbers: This growth appears to be happening at the incumbents’ expense.
The biggest movers: Combined, Chime and PayPal scooped up 43% of digital bank/fintech account openings and 20% of all new checking accounts opened in 2023.
Account openings overall are increasing: The study pointed out, however, that only a small percentage of consumers open accounts every year. That number has increased during 2023, at 14% so far this year, after rising just a few percentage points year over year, from 10% in 2020, to 12% in 2021, to 15% over the entirety of last year.
The secret of their success: The banking industry’s long-term health depends on providing services to young consumers. This cohort doesn’t write paper checks drawing on their checking accounts anymore (and anyway, the US Postal Service and many banks are warning consumers of all ages not to send checks by mail).
The report theorizes that Millennials and Gen Zers can’t tell a checking account from a payment tool because they’re used to paying with merchant apps, Apple Pay, PayPal, Klarna, and Venmo. What they’re looking for is really an all-in-one financial app that includes bill management, subscription management, credit score monitoring, and automated saving and investing, maybe even tax prep and crypto access. It’s fintechs that are bundling these desirable services together, rather than traditional banks and credit unions.
This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.