The banking industry is one of the largest and fastest growing industries of the modern society. The existing ‘bricks-and-mortar’ financial institutions are increasingly threatened by a new type of non-branch based online players who offer convenient and technologically enhanced services. These are lean-focused fintech startups that are applying advanced technologies to offer customers best digital banking solutions and reduced charges.
As estimated by Business Insider Intelligence, digital-first banks shall reach more than 100 million consumers in the United States only by 2023. The increased adoption of digital banking services poses a threat traditional players as more clients shift towards the online banking services.
Here are the top 10 digital-first banks leading the online banking revolution:Here are the top 10 digital-first banks leading the online banking revolution:
1. Chime
Chime is a financial technology company launched in 2013 in San Francisco that offers an easy-to-use app, no fees charged monthly, and early access to deposited paychecks. It provides customers with a Visa debit card and Federal Deposit Insurance Corporation on checking and or saving accounts. The mobile-first journey includes budgeting and saving, automatic savings, as well as fee-free overdraft of up to $200. *
Chime is, in fact, the largest digital banking platform in the US with over 12 million accounts. This is due to features such as avoiding bank fees, the foul-mouthed logo, and community banking events around the country.
2. Varo
All in all, the Varo Money’s main goal is to improve people’s financial situation of working Americans and make them financially independent. Founded in 2017 in San Francisco, Varo got a national bank charter in 2020, becoming the first all-mobile fintech.
Varo is a full-service online bank that provides premium bank accounts with up to 2. 80% APY*, early direct deposit, and lots of useful features. Customers also have a zero-fee overdraft up to $250, and a special lending portfolio called Varo Believe to build credit.
3. Current
Current, founded in 2015 in New York, presents itself as the ‘anti-bank’ that ‘sucks less’, providing a premium mobile banking experience that includes early access to pay combined with sophisticated budgeting tools and an exclusive metal physical and virtual debit card.
Current is currently favored by millennials and Gen Zs. It offers an engaging cashback feature through which the consumers can be rewarded up to 15% when they shop at certain merchants or stream services. Customers also get overdraft up to $200 without any additional charges. *
4. MoneyLion
MoneyLion was established in 2013 in New York City and defines itself as being a part of the banking industry, a financial advisor, and a merchant marketplace. It has a mobile application that incorporates banking services, credit-building products and services, low-interest micro-loans, cryptocurrencies, and stock investments, and cash rebates.
It also has managed investment portfolios. It got the pre-approval from the OCC in September 2021 for the national bank charter. It now manages over $231 billion for over 2. 9 million customers focusing on helping them convert spending, saving and investing.
5. Aspiration
Founded in California, Aspiration is an online bank for the people who decided to change the world one purchase at a time. Known as ‘Save, Spend & Give,’ it is an app and based on spending, it helps users calculate their carbon footprint but also plant more trees.
Aspiration offer up to 15% cashback for shopping at ethical stores. They also have 100% fossil fuel-free accounts and use renewable energy to purchase carbon offsets for their customers. Aspiration had over 300,000 funded accounts by the year 2020.
6. Dave
Founded in 2017 in Los Angeles, Dave describes itself as an ‘everyman’ fintech application. It was recognised as one of the most innovative companies in 2022 by Fast Company, and it uses AI and machine learning to assist users to efficiently track, understand and manage their expenses and cash.
Dave constructs an expense estimate for you and assists in avoiding overdrafts with a credit of up to $250 with no interest charges. It also helps users establish credit and obtain employment. Dave was last valued at $4bn after its latest funding round and had over 10 million customers in early 2022.
7. Upgrade
Launched in 2017, Upgrade is a San Francisco based fintech startup providing unsecured personal loans and credit cards that are made using machine learning algorithms. Approved customers benefit from competitive rates, payments flexibility, and rewards.
Upgrade’s concern is as much about the financial well-being of the borrower as it is about the lending process. It offers free credit monitoring and money advice based on the user through the mobile application. Upgrade has provided more than $6 billion of affordable credit to over a million consumers across the United States to date.
8. Money onto
Moneyon was launched in 2018 in New York City and positions itself as the ‘unbank’ aimed at targeting the credit-invisible or lower-income population. It should be noted their rewards debit cards and bundled financial services are a much better option than exploitative payday loan providers and check cashing services.
Moneyonto integrates digital current accounts with credit builder and savings initiatives. Customers also receive extra privileges in receiving pay, cash, cryptocurrency investment, and lower prices on daily products. As of 2022, Moneyonto had around 104 thousand users, including the active ones.
9. Zeta
Zeta is a startup which was established in 2019 in San Francisco, and it provides consumers with the high yield account, the budgeting tool, and the innovative payment card. However, its primary aim is to enable enterprises to easily develop and implement embedded finance solutions.
Zeta provides an API-first banking and payment solution that helps companies across the globe. It makes it possible to incorporate advanced fintech features seamlessly across industries such as crypto, e-commerce, neobanking, finance apps, and others.
Thus, to its success in 2022, it was possible to reach the level of over $ 2 billion thanks to the high popularity of embedded financial products. It currently supports more than 10 million accounts as of early 2022.
10. Novo
Novo is another specialist financial application launched in New York City in 2021, which provides a full-fledged banking experience within a single application. This includes fee-free checking/savings accounts, budgeting, ‘Spaces’ to categorize funds, and physical/virtual debit cards.
Novo also makes it easy to buy/sell crypto directly from its own accounts. Its Syndicates program allows the customers to invest together with others in assets such as IPOs that were previously available only for institutions.
Revolutionizing Banking for a Digital Era
Banking that has an online focus has multiple benefits in a world where the internet is becoming the primary way of doing business, especially for the millennial and Gen Z customers. These are mobile banks which have efficient and strong digital platforms, cheaper than traditional ones, higher interest on investment and other services that other traditional banks cannot offer.
That is why it is expected that the revolution of neobanks, which is already gaining pace, will receive even more support from regulators. I think there will be further competition in the field of financial applications with a focus on customers for everyday banking, loans, savings and investment and many others. To hold the market share in the 2020s incumbent banks have no other option but to rethink their products, channels and expand strategic cooperation with the modern, fast moving fintechs.
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