Deposit Taking FinTech Companies: What This Means For Financial Institutions

A new threat to financial institutions exists: deposit-taking Financial Technology (FinTech) companies.

Over the last decade, a number of direct-to-consumer FinTech companies have entered the market with attempts to deliver a more powerful financial experience to consumers. Examples of these companies include robo-advisors (Betterment, Wealthfront), personal financial management tools (Simple Bank, YNAB, Qapital), borrowing companies (SoFI, Lending Club) and many others. At first, these companies were focused on helping consumers improve a specific aspect of their financial life. Replacing the consumer’s primary banking relationship was either not the focus, or just not possible at the time (mainly for regulatory and scalability reasons).

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