reinventing retail financial products to beat the megabanks · reinventing retail financial...
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Reinventing Retail Financial Products to Beat the MegabanksRon ShevlinManaging Director, Fintech ResearchCornerstone Advisors
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FIXING THE USER EXPERIENCE OF AN OBSOLETE PRODUCTIS LIKE BOLTING AN ESCALATOR ON THE SIDE OF A HORSE BUGGY
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$13.7B
$44.4B
2012 2018Source: Devenir Research
HEALTH SAVINGS ACCOUNTS
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DEPOSIT DISPLACEMENTIS DIMINISHING THE IMPORTANCE OF CHECKING ACCOUNTS
$2.2 BILLIONHELD IN VENMOUSERS ACCOUNTS
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Or the bank. @rshevlin
HOW LIKELY WOULD YOU BE TO USE ADEBIT CARD FROM THE P2P PROVIDERS?
(% of Millennials responding “Very likely, might use it as primary card”)
PayPal
44%
Apple Google Venmo
Source: Cornerstone Advisors survey of 2,015 US consumers, Q3 2017
25% 24% 20%
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STARBUCKS HAS AMASSEDMORE THAN $2B IN DEPOSITS
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Source: AT Kearney
BY 2020, ROBO-ADVISOR ASSETSWILL REACH $2.2 TRILLION$1 TRILLION SHIFTED FROM DEPOSITS
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DEPOSIT DISPLACEMENTIS DIMINISHING THE IMPORTANCE OF CHECKING ACCOUNTS
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CHECKING ACCOUNTS HAVE BECOME
PAYCHECK MOTELS
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NEOBANKS HAVE SIMPLY NOTREINVENTED CHECKING
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“The app's target audience is younger consumers and students who are new to banking and learning about personal finance and budgeting.”
--Wells Fargo
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ALREADY HAS OR WOULD CONSIDER OPENINGAN ACCOUNT WITH A NEOBANK
YoungMillennial
OldMillennial
Gen Xer BabyBoomer
Source: Q2/Cornerstone Advisors survey of 2,436 US consumers, Q3 2018
31%
55% 46%
12%
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• BUNDLED SERVICES
REINVENTING FINANCIAL PRODUCTS
Source: Q2/Cornerstone Advisors survey of 2,436 US consumers, Q3 2018
FOUR OUT OF TEN OLDER MILLENNIALS AND GEN XERS
WOULD OPEN A BUNDLED AMAZON CHECKING ACCOUNT
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If your bank offered a checking account bundled with services—for a $5 to $10 monthly fee—how likely would you be to switch?(Base=Free checking account holders between the ages of 21 and 54)
WOULDDEFINITELY
SWITCH
MIGHTSWITCH
PROBABLYWOULDN’T
SWITCH
DEFINITELYWOULDN’T
SWITCH
17%
41%
24%18%
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Source: Q2/Cornerstone Advisors survey of 2,436 US consumers, Q3 2018
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• BUNDLED SERVICES
• SAVINGS TOOLS
REINVENTING FINANCIAL PRODUCTS
PEOPLE DON’T WANT SAVINGS ACCOUNTS,THEY WANT HELP SAVING MONEY
Source: Q2/Cornerstone Advisors survey of 2,436 US consumers, Q3 2018
3,828,300
1,745,700
606,300 525,000 503,300
$2,297 $1,536
$1,411 $170 $176 $-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
Acorns Stash Digit Qapital Debitize
Accounts 2018 Savings ($ millions)
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• BUNDLED SERVICES
• SAVINGS TOOLS
• FINANCIAL HEALTH SERVICES
REINVENTING FINANCIAL PRODUCTS
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1960 1970 1980 1990 2000 2010 2020 2030
LOCATION
HEALTH
RATES
IMPORTANCE
NEW COMPETITIVE DYNAMICS IN BANKING
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00
WHO WILL BETHE FITBITOF BANKING?
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CONSUMERS NEEDFINANCIAL HEALTH SCORES
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DON’T LET YOUR FINANCIAL PRODUCTS BECOMETHE HORSE AND BUGGY OF THE 21ST CENTURY
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• Fintech innovations have diminished the importance of the checking account in consumers’ financial lives
• Mid-size financial institutions can’t compete on user experience
• Reinventing financial products is not the same as new product development
• Changing competitive dynamics will play to mid-size financial institutions’ positioning and strengths
Key Takeaways
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