Cheap, Focused, Mobile—and Not a Bank

How Silicon Valley is winning the money of young consumers

- Misyrlena Egkolfopoulou

If you’re under 40 and looking for help managing your finances, there’s a long line of companies eager to sell you something. Most likely, it’ll be a service built to work on your mobile phone.

Younger consumers are moving away from big banks for payments, borrowing, saving, and investing. They’re finding apps that bypass aspects of the financial system they’ve come to loathe, from credit card fees to overdraft penalties to credit checks. The fast-growing financial technology industry includes zero-commission brokerages, online investment advisers, “buy now, pay later” lenders, and so-called neobanks—digital-only companies that offer services such as debit cards and savings accounts without necessarily being banks themselves. (They can outsource those parts to insured deposit-taking banks they have partnerships with.)

In 2021 the number of neobank customers in North America and Europe approached 80 million, according to research firm PitchBook. By 2026 it’s projected to hit 224 million. Neobanks’ revenue is expected to rise 580%, to $61 billion in 2026 from almost $9 billion in 2021.