In November 2019, Google announced in an article in the Wall Street Journal that it would be getting into the retail banking business through Citigroup and Stanford Federal Credit Union. The reaction from the banking industry was resigned acceptance that this day had come. “Big Tech” (firms like Google as well as Amazon, Apple, Facebook, and the like) and fintech have been making investments in banking and money management solutions, offering their customers opportunities to improve the flow of a variety of payment transactions with the objective of acquiring and retaining clients while gathering a wealth of data they can use from tracking financial activities. Banks and credit unions are facing this competition from technology-focused competitors that have few concerns about the profitability of their banking products. Cash-rich Big Tech can easily invest in banking and payment solutions and justify the investment through customer retention and engagement (not to mention data). Smaller fintech firms are more concerned about meeting their investors’ demands for growth in the number of active users and transactions than they are about profitability.
In the Mercator Advisory Group research report, Fintech and Debit Cards: Battling for Consumers’ Attention, we investigate how Big Tech and fintech are providing digital solutions to help consumers to budget, save, and invest. These firms frequently use debit cards as an access point to consumers’ checking accounts to gather transactional data to inform their apps. In some instances, the solutions discussed here have consumers fund a reloadable prepaid debit card linked to their primary financial institution’s debit card to track activity. When successful, these apps can attract more attention from and interaction with consumers than the financial institution’s own mobile application. Note that this report does not veer into the topic of challenger or neobanks looking to displace consumers’ financial institution.
New Mercator Advisory Group research report, Fintech and Debit Cards: Battling for Consumers’ Attention, explores consumers’ use of financial planning apps from fintech companies and its impact on financial institutions.