Digital Consumer Banks in the U.S.: Your Money or Your Wallet


Digital consumer banks in the U.S. are already a competitive force.

Mercator Advisory Group releases new research on the complex competitive landscape of U.S. digital banks.

Author: Ken Paterson
Published on: April 5, 2019

Digital banking may have the image of bleeding-edge start-up companies, but the reality is quite different. A new research report from Mercator Advisory Group titled Digital Consumer Banks in the U.S.: Your Money or Your Wallet, identifies five different segments of digital consumer banks in the United States that all are competing for consumer deposits but are generating them in surprisingly different ways. At one competitive extreme, the transaction account is the focus with added budget management and personal financial management (PFM) capabilities, sometimes to the exclusion of other deposit or lending products. At the other extreme, premium-priced savings and time deposits generate the large deposit volumes required to fund their banks’ lending. This new report from Mercator Advisory Group takes a critical look at the evolving marketplace.

“With over one-third of U.S. consumer households with financial institution relationships already doing business with online banks, the use of digital institutions is not a fringe activity. Online banks have established an enviable initial market position, one that improves consistently. Moreover, while they may not always be known for innovative apps or user experience, the dominant larger players offer impressive product menus, and consumers are quite willing to buy those products online. Defining digital banking as just fintech-associated firms misses today’s real market movers,” comments Ken Paterson, VP, Special Projects at Mercator Advisory Group, author of the report.

This research report has 20 pages and 7 exhibits.

Companies and other organizations mentioned in this report include: Ally Bank, American Express Bank, Comenity Bank, Discover Bank, Douugh, Capital One, Charles Schwab Bank, Chime, FDIC, FFIEC, Marcus/Goldman Sachs, Moven, Synchrony Bank, and USAA Bank.


Highlights of the research report include:

  • Total deposits held by digital banking organizations exceed an estimated $1 trillion as of year-end 2018. Fintechs and their partner banks represent the smallest deposit-gathering segment.
  • Full service checking accounts with associated debit cards are widely offered through digital banks, and consumers are widely accepting these online relationships for their transaction accounts.
  • The ongoing low-rate environment for deposits has drawn attention, and deposits, to online banks offering premium-priced savings and time deposit accounts. Institutions able to maintain competitive deposit rates are building stable deposit bases rather than hot money that will jump to competitors for higher rates.
  • The strategy of establishing digital bank brands within a legacy institution (e.g. Marcus/Goldman Sachs) appears to be having broad success, especially when combined with premium deposit pricing positioning.
  • While start-up fintech banks have shown innovation in their user interfaces and market positioning, they have often struggled with charter and other regulatory strategies. Those in operation typically work with a third-party bank providing a banking-as-a-service (BaaS) account platform and charter.



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