NEW YORK: When London-based Revolut opens its virtual doors in America this year, it will be the latest European digital bank to challenge incumbent U.S. lending giants after forays by Monzo and N26, but the challenges it faces have not diminished.
But customers of the country's roughly 4,500 FDIC-insured commercial banks are far more dependent on credit than in Europe, with a fondness for racking up credit card loyalty points and individual store cards. Berlin-based N26 arrived in July, touting cashback rewards and other perks. Its app, which allows customers to store and move money around sub-accounts called"spaces", had 250,000 U.S. customers by late January.
Whereas challenger banks in the UK are eroding market share of traditional lenders, in the U.S. fintech is mostly snaring business from smaller lenders and credit unions which have less resources to invest in digital, leaving analysts skeptical about whether they will be able to achieve viable scale.
Just 3per cent of U.S. millennials - those born between the early 1980s and mid 1990s and a fintech target group - surveyed by Cornerstone held their main checking account a digital only challenger. Some partner with local banks for simplicity's sake but that can present its own problems, said Sarah Kocianski, head of research at 11:FS, a London-based financial-technology consultancy.