reinventing retail financial products to beat the megabanks · reinventing retail financial...

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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RSHEVLIN@CRNRSTONE.COM

@RSHEVLIN

WWW.FORBES.COM/SITES/RONSHEVLIN/