As I was mulling the endgame of consumer-facing fintech startups like Robinhood, Acorns and Wealthfront earlier this week, I realized big hitters like this are all becoming cooler, better banks people can relate to.
I asked why Acorns, whose goal is to make investing effortless, would want to add a debit card. At first, it didn’t make sense because my friends love the digital-only aspect of Acorns.
Now I get it. Acorns, like a few other red hot fintech startups, is on the long march to bankhood, whether they want to say it or not. Win the crowd with a certain product—investing in this case—then sell them other products later.
Alright, here is the fintech-pill. Take it, internalize it, and the space will finally make sense:
Every fintech company is just a disguised strategic growth hack where the real goal is to become a bank. Robinhood, Stripe, Coinbase, Affirm, Acorns. Bank, bank, bank, bank, bank.
— John Backus (@backus) December 14, 2018
A cool debit card and a slick educational platform people relate to like Acorns Grow may very well be two spokes of an eventual bank hub. And the next spoke is Acorns Later IRA. Boil the frog slowly.
I love how Acorns is reskinning The Bank, and another app who’s in it to win it is MoneyLion.
I’ve spent time learning the MoneyLion vision directly from their C-Suite this year, and the thing CEO Dee Choubey got really excited about when we talked was customer engagement. Some of the customer datasets he previewed for me were like Facebook or World of Warcraft levels of daily user activity. People collect MoneyLion login streaks like Snapchat streaks, and if you log in every day, you get cash back towards the cost of your monthly membership to the service.
I mention two huge social media platforms—Facebook and Snapchat—because I see MoneyLion slotting itself into users’ lives like those apps did: by offering rewards for coming back. And the best part is customers win, whether it be the dopamine rush of seeing that red notification bubble pop up, or the joy of seeing your savings account get bigger and bigger on a daily basis.
(Also see Julian’s take on how Dee and MoneyLion have mastered a non-banky way of talking to customers.)
Acorns and MoneyLion models aren’t the only methods fintechs are using, but these two approaches stand out to me as we all watch fintechs march down the bank road. We’re going to see a lot of new fintech features from the consumer-facing brands—Stash, Digit and others—and we’ll have to see which brands customers are willing to go all-in with.
One day soon, these apps are going to have to tell you that they’re a bank now. Or maybe not, because they’ll do such a good job of being your financial friend and coach instead of becoming your Big Bank. I’ll be watching it for you in 2019.