Coronavirus pandemic a setback for fintech challengers? Big banks think so
Fintech startups chipped away at U.S. banks’ customer base for years, in everything from wealth management to consumer lending and beyond. Now banks say they’re taking some market share back.
Traditional lenders are seeing the coronavirus pandemic as weakening the upstarts that have been challenging them since the last financial crisis, with consumers seeking refuge with larger companies to cope with the outbreak’s economic toll. Clients are gravitating toward the “biggest, stable institutions,” says Morgan Stanley CEO James Gorman.
“There were some major outages with some of the new online robo players,” Gorman said at Morgan Stanley’s Virtual U.S. Financials Conference. “That doesn’t work. You can’t not access your account for several days.”
Earlier this year, online brokerage Robinhood’s trading platform failed repeatedly as global stocks swung on news about the coronavirus. The glitches spurred some clients to leave the platform for competitors.
Bank of America customers have opened almost 300,000 new investment accounts on the company’s Merrill Edge platform, consumer and small business head Dean Athanasia said during the conference.
There’s a “flight to quality,” he says. “So we are attracting an awful lot of new clients.”
The client influx goes beyond investing and wealth management. Citizens Financial Group is gaining market share in mortgages as “a lot of the nonbanks are having some real challenges at the moment,” says consumer banking head Brendan Coughlin.
--With assistance from Sridhar Natarajan.