LONDON–Seven American “challenger banks,” also often referred to as fintechs, cumulatively recorded user growth of 39.28% between 2019 and 2020, according to new data released by Trading Platforms.
According to the analysis, during 2020 the selected banks recorded 39 million users, while in 2019 the figure stood at 28 million.
Chime, with the overall highest users, recorded a growth of 25% between the period. In 2020, Chime users grew to 10 million from eight million in 2019, Trading Platforms reported.
Other challenger banks also saw growth, including:
- Acorns, which had the second-highest user and record growth of 29.03%, growing to eight-million users in 2020 from 6.2 million in 2019.
- Dave, which recorded a growth of 40%. In 2020, Dave had seven million users, up from five million the previous year.
- Money Lion saw an increase of 50% to six-million users in 2020.
- Stash, which in 2019 had 3.3 million users before growing by 51.51% to five million users in 2020, Trading Platforms said.
- Varo, which recorded 100% growth to two-million users in 2020.
- Current, which has the least number of users among the providers measured, but which also saw 100% growth to one-million users in 2020.
Effect of COVID-19
"Undoubtedly, COVID-19 has taken a toll on the global economy, but it powered the digital transformation of Neobanks to become one of the businesses that flourished during the pandemic. Part of the containment measure for the crisis required minimal movements, which lowered in-person banking traffic,” Trading Platforms said. “Contamination of the currency posed another threat forcing people to turn to digital platforms for transactions. The urge to embrace challenger banks was more urgent than ever as they solved the practical shortcomings of traditional banking in the wake of the health crisis."