Fintech/Digital Banks Rising in the Checking Account War.

Does this trend change the mind of an investor to lean on the side of Fintech Banks vs Traditional Banks? Which side would you invest more in and why?

A recent study by Cornerstone Advisors showed the increasing trend of Americans opening Fintech checking accounts:

• In the first half of 2023, Fintech/Digital Banks captured nearly half (47%) of all new checking accounts.
• Fintech/Digital Banks' growth is coming at the expense of large banks.
• Chime and PayPal represent 20% of all new checking accounts opened in 2023.
• In the first half of 2023, SoFi’s market share quadrupled to 4% from 1% in 2020 while Wells Fargo’s share dropped by more than a half to 3.5%.
• Young Americans dominate new checking accounts opening in 2023 with 72% being Gen Zers or Millennials

The article continues by emphasizing the trend of more percentage of Americans opening new checking accounts. Megabanks may not feel the pain as they have more affluent consumers and many may have more than one checking account. However, the article goes further and stated that megabanks should feel the pain because the percentage of consumers using them as their primary checking account provider is on a decline. This declining trend spreads to regional banks, community banks, and credit unions as they all are losing their share of being Americans' primary banking providers.

Apparently, more than a third of Gen Z and Millennials, and nearly thirty percent of Gen X consider Fintech/Digital Bank as their primary checking account provider. The reasons for this Fintech/digital trend are:

1. Young consumers pay with many available digital methods.
2. Fintech/Digital Banks offer a multitude of products within their "checking account."
3. The Fintech/Digital Banks often offer more metrics to measure financial health and performance.
4. The percentage of assets spent on marketing is much higher by the Fintech/Digital Banks for brand awareness.

https://www.forbes.com/sites/ronshevlin/2023/07/05/the-checking-account-war-is-over-and-the-fintechs-have-won/?sh=46916b2e3a31