This recap features updates on bank technology, payments, online lending and other news in the U.S. financial technology space. Send tips, ideas and chatter to firstname.lastname@example.org. For other recent fintech news, click here.
JPMorgan Chase & Co. is hoping it can snare young customers who feel no need to set foot inside a branch.
The bank is the first large, traditional institution to pitch an app-based, digital-only bank for millennials, a generation that overwhelmingly uses smartphones for banking services. The company on June 28 announced the nationwide roll-out of the offering, Finn by Chase, which allows customers to open digital-only checking and savings accounts and make deposits using their smartphones.
Finn customers have free access to more than 29,000 ATMs, but they cannot use services offered at the bank's branches and instead chat with representatives via the app or a helpline, making it a hybrid of the online-only bank model and the digital access now common in other traditional bank accounts.
Competition in the marketplace for digital-only bank accounts is heating up. Among the large incumbents are Goldman Sachs Group Inc.'s Marcus, Ally Bank and BofI Holding Inc.'s Bank of Internet USA, all of which are primarily accessed through a browser.
Some, such as Marcus, do not yet offer an app, while Finn is geared for mobile users, although it does allow customers to use limited features on chase.com. It is similar to mobile bank apps such as Banco Bilbao Vizcaya Argentaria SA-owned Simple and Moven, in that all of them offer fee-free accounts and allow users to track spending and set a savings plan. Finn distinguishes itself from traditional banking apps by seeking to identify with millennials: For instance, it allows customers to add feelings about purchases through emojis and to rate each purchase as a want or need.
Like other mobile-only banks, Finn offers low interest rates, which range from 0.01% to 0.04% depending on the balance. In comparison, online accounts at Goldman and Ally Bank pay interest rates of more than 1.5%.
Wells Fargo & Co. and Social Finance Inc. also plan to release their own apps that offer checking and savings accounts and provide financial management tools. SoFi's banking app, SoFi Money, plans to pay interest rates of more than 1%, while Wells Fargo has not disclosed the interest rates on its Greenhouse digital-only accounts, which are at the beta stage of development.
For JPMorgan and Wells Fargo, the digital-only bank accounts are not their first mobile offerings. JPMorgan had more than 30 million users for its mobile banking app tied to its Chase branches as of March 31, while Wells Fargo said in May that it had 22 million mobile banking customers.
Along with Bank of America Corp., the two traditional banks appear to enjoy popularity among mobile users. Nearly 39% of the 4,000 U.S. mobile bank app users surveyed by S&P Global Market Intelligence in February identified one of the three financial institutions as their primary bank.
Growing popularity for person-to-person payments among mobile banking users, according to the survey results, should give hope for traditional banks looking to launch digital-only accounts for mobile users. Both Wells Fargo and JPMorgan offer access to Zelle, a fast-growing, bank-led P2P mobile payment network that processed more than $25 billion in the first quarter.
In other fintech news, U.K.-based Monzo Bank Ltd., an app-only bank valued at $336 million, could reach 1 million users by September or October, CEO Tom Blomfield told Reuters. The company said in an annual report that more than 750,000 people presently use its current accounts. Pretax losses at the company widened for the year ended Feb. 28 to £33.1 million from £7.9 million in the year-ago period.
In China, mobile payment companies Ant Financial Services Group's Alipay and Tencent Holdings Ltd. could lose out on a revenue stream due a new regulation. The People's Bank of China requires mobile payment companies to keep all prepaid funds made by mobile wallet users with the central bank, starting July 9, depriving the companies of an opportunity to earn interest on the cash, Caixin reported.
From June 29 to July 6, the SNL U.S. Financial Technology Index rose 2.15%.
A recent report from S&P Global Market Intelligence explores how banks and insurers are embracing fintech innovation. The report looks at recent trends and provides outlooks for the insurtech, digital lending, digital investment management, digital banking, payments and distributed ledger technology sectors. Click here to read the report.