About 15% of U.S. millennials held primary accounts at digital banks in December, up from 5% at the start of 2020, Reuters reports . The gains for digital banks have been fueled by word-of-mouth referrals by U.S customers during the pandemic thanks to quicker processing of stimulus payments than traditional banks.
- Digital banks have generated praise from individuals who celebrated their early deposits online and encouraged others to join them.
- Digital banks such as Chime operate primarily through smartphone apps, which attract depositors with perks like no fees or minimum balance requirements.
- Other digital banks offer early access to recurring deposits, referral bonuses, or free cash advances.
- Big banks and startups alike got complaints due to delays that stemmed from the Internal Revenue Service misrouting millions of payments and challenges like not having direct deposits set up.
- Analysts are optimistic of further gains for digital banks beyond the stimulus packages.
Digital bank Varo more than doubled its customers in 2020, while Current’s customer figures rose from 1 million users in June to more than 2 million in November.