A new one through Cornerstone Advisors found that 76% of homeowners with smartphones use mobile apps to manage their finances with money-generating corporations such as Robinhood, PayPal and Credit Karma.
Unsurprisingly, the differences in use between generations are significant: 93% of Generation Z and Millennials (21 to 40 years old) use cellular monetary applications, 81% of Generation X (41 to 55 years old) are fintech users, and even 56% of baby boomers use at least one cellular application to manage their monetary life.
Bankers may be aware of the fintech adoption rate by customers, but they are unaware of the effect this fintech activity has on the monetary establishments for which they work.
It is true that, to some extent, classical monetary establishments have lost business to new financial technology companies, but more than anything, classical banks have a percentage of consumers with financial technology.
Traditional banks seem to ignore this. They think that because consumers have an account with them, they are the bank with which their consumers do business.
Right.
The CEO of a network bank told me about one of his wealth control clients (let’s call him Jack). Jack had $5 million in an investment account, all invested in high-risk stocks.
The bank has asked Jack to diversify his holdings, but it was in vain.
The bank’s CEO invited Jack to dinner and asked him why he had resisted the bank’s board. Jack said, “You have my funny cash, my fictitious cash. Most of my assets are owned by an investment control company. “
This is an example of the parallel monetary life of consumers: monetary behaviors and activities that are beyond the sight of the monetary establishments with which they do business.
The use of cellular programs by consumers to manage their finances, adding banking, savings, investment and credit score control programs, is helping to create a parallel monetary life.
Traditional suppliers such as Merrill Lynch and Fidelity would possibly dismiss the recent Robinhood-GameStop antics as a small segment of the market, and a segment they are not interested in.
It would be a mistake.
Of the millions of Americans with an investment account, 30% (25 million) have an account with a virtual broker or a robot advisor like Robinhood, Acorns or Stash.
Overlay is important. A third of JPMorgan and 27% of Merrill Lynch have an account with a virtual broker or a robot advisor.
On average, investors with a virtual brokerage account or a robot advisor have about a third of their overall investment portfolio in those accounts, and JPMorgans and Merrill Lynches have no concept of that money.
Among U. S. adults, 36% have more than one existing account, with approximately one in six secondary accounts in virtual banks. Among the 3 current accounts, 30% of the third account is in virtual banks.
With more than 12 million users, Chime is the leader in the virtual banking space, followed by Varo with 2. 74 million, Ally with 2. 27 million and Current with 2. 21 million customers.
The effect of multiple accounts on classic banks is felt in two ways:
Traditional banks are unaware of this parallel monetary activity, even virtual banks do not have that visitor’s view, among consumers that a virtual bank is their main bank, 42% have more than one account, and some of them have that account at the moment with a classic bank.
As classical banks promote it with a 0. 05% interest rate for deposits into their savings accounts, consumers have turned to a new generation of mobile apps, automated savings apps, to help them. Save.
Cornerstone found that savings app customers save an average of $600 a year above their previous level of savings. At an interest rate of 0. 05%, a customer would want $1. 2 million in a savings account to earn $600 a year.
Mobile apps like Digit and Qapital help consumers how much they can save, then withdraw cash from their checking accounts and put it into savings accounts.
However, the challenge for some banks is that cash is transferred out of their establishment even if their consumers haven’t closed any accounts, and banks don’t know why.
Bankers would probably know that Credit Karma is the leader in credit score control with more than one hundred million members in the United States, Canada and the United Kingdom. What they probably wouldn’t know, however, is how consumers use Credit Karma – and their own. banks: to track and manage your credit score.
A Generation Z, a Generation Y, and one in 3 Generation X use Credit Karma at least once a week. Good news for bankers: 25% of consumers use their main bank to manage their credit score at least once a week. Many banks, however, are that almost a percentage of consumers – 23% – turn to a secondary bank to do so.
The emergence of parallel monetary life of consumers, imaginable through the increasing use of cellular monetary applications, means:
For a loose version of cornerstone Advisor’s studio, American ‘Shadow Financial Lives: The Mobile Apps Banks Don’t Know They Use, click here.
Ron Shevlin is the Managing Director of Fintech Research at Cornerstone Advisors, where he publishes commissioned reports on fintech trends and advises both.
Ron Shevlin is the Managing Director of Fintech Research at Cornerstone Advisors, where he publishes reports of commissioned studies on fintech trends and advises established and new money generation companies. Author of Fintech Snark Tank at Forbes, Ron is ranked among the most productive fintech influencers in the world, and is a key speaker at times in the banking and fintech sector. Want to communicate more about fintech? Connect on Twitter or LinkedIn.