JP Morgan Chase’s Finn – is a bit of a hybrid – a digital app loaded with features suited for its millenial target market, as well as, a digital branch mechanism to transfer customer’s funds to new Chase checking and savings accounts. The reason for this was to attract customer’s that sought to bank with Chase, but had little to no access to a branch. The digital banking app launched in 2018, and soon proved that the Chase brand was in fact best positioned to provide that combination of services to Finn’s 47,000 customers.
Three important takeaways from this: (1) Consumers who open accounts with digital banks don’t do so because they want a bank with no branches. A higher value is attributed to better financial management tools, rewards, and interest rates. (2) A differentiated service offering than what exists in the market is critical to garner significant adoption rates amongst a younger target market. Finn didn’t offer its consumers – nor existing Chase customers – anything they couldn’t get elsewhere. (3) A lack of understanding the market you are attracting, is probably the cause of poor uptake. In a recent poll by Cornerstone Advisors research – Finn had clearly tailored its market to the wrong demographic with just 7% of 20-something Millennials and 6% of 30-something Millennials said a digital bank would be in their consideration set. Contrast that to the 9% of Gen-Xers and 7% of Boomers who said they would consider a digital bank.
This is Fintech at its best – multifaceted, difficult, iterating on a solution to cater to the largest customer demographic as possible. Access and democratization are its core values, even if it is not decentralized nor truly disruptive. The kicker is if you get this wrong, then call it a day.