1) Stripe… is a fintech winner for 2020. It continues to innovate and recently announced the launch of Stripe Treasury which will: “Enable platforms like Shopify to offer merchants access to financial products. Platforms can offer users interest-earning accounts eligible for FDIC insurance and enable customers to have near-instant access to revenue earned through Stripe, and then: 1) spend it directly from their balance with a dedicated card, 2) transfer it via ACH or wire transfer, or 3) pay bills.”
2) Chime… While many challenger banks (and now legacy banks) prattle on about their “customer experience,” Chime gains customers through product “featurization:”
[-] Early access to their money. Nearly a quarter of Chime customers said they chose the fintech as their primary bank because it offering 2-day early access to their direct-deposited paychecks…
[-] Spot Me. This product feature lets Chime customers make debit card purchases that overdraw on their accounts with no overdraft fees…
[-] Credit-builder credit card. Chime’s predominantly low- to middle-income consumers aren’t in the crosshairs of the big credit card issuers’ marketing efforts. According to Cornerstone’s research, 15% of Chime’s primary banking customer base either has the card or is on the wait list for the card—all within six months of launching the card.
3) Cross River Bank
A leader in the bank-as-a-service space, Cross River earned its spot on the Winners list thanks to the Paycheck Protection Program (PPP)…
4) Shopify … [what earns Shopify it’s place on the podium]—it’s how it is advancing embedded finance (more specifically, embedded payments). The company’s Shop Pay offering: 1) enables customers to get one-tap checkout and 0% installment payments (i.e., BNPL), and 2) promises merchants faster checkout speeds and reductions in cart abandonment.
In addition, the company announced that it will use Stripe Treasury (see Winner #1) for Shopify Balance. According to TechCrunch, “if a Shopify merchant wants to hold money, pay bills and spend money from their Shopify account, they can open a bank account in Shopify Balance directly.”
1) Credit unions
It hurts to name credit unions as one of the losers in fintech and banking for 2020, but the numbers don’t lie.
2) Robinhood… it seems like every week that the company is in the news being accused of something by somebody.
3) OnDeck Capital
In July 2020, OnDeck was acquired by Enova for less than 10% of what the small business lender’s market value was in 2015…
There are common themes running through these lists:
1) The shift to digital created winners like Stripe, Chime, and Shopify—but losers like credit unions.
2) The growing importance of small business in the banking world helped put Cross River on the winning side, but the difficulty in profitably lending to small businesses forced OnDeck onto the losers list.
3) Embedded finance offerings from Stripe and Shopify helped to solidify their dominance in the fintech world.
The thing to remember, though, is that this year’s winners could easily be next year’s losers—and vice versa. Let’s see how 2021 plays out.