TBT: These days, who isn’t playing bank?

It was a dreadful advertising campaign. I figure it’s safe to say that now, since the bank in question has long since been acquired by another bank, which was in turn acquired by another bank, and that one by another, and so forth. 

The tagline was “We want to be your bank.” They even set it to music, repeating the strain ad nauseam during commercials. Yet even if you liked the ditty, which is unimaginable, “We want to be your bank” gets the marketing backwards. Markets don’t give a hoot what you or I want. It’s our job to give a hoot about and deliver what they want.

So when I saw a PYMTS.com headline that said, “Uber Money Wants To Be The Bank Account For Uber Drivers,” I wondered if déjà vu was rearing its head. I was relieved to see that that’s PYMTS.com’s claim, not Uber’s. Uber is getting its marketing right: It gives a hoot about what its drivers want, and is now delivering it. And what Uber drivers want, in fact, is what all gig workers want: prompt payment. 

Which shouldn’t surprise. No one signs up to be an Uber driver with delusions of attaining riches. As CNBC reported, by and large the goal is to make ends meet. In that scenario, waiting weeks for pay can be counterproductive. 

Another reason it shouldn’t surprise is that, per TechCrunch, …

… Uber has long been at odds with its drivers when it comes to pay. The last several years have been filled with lawsuits, protests and a legislative win for workers in California regarding how Uber classifies its drivers. 

Perhaps that’s why the company launched Uber Money, of which, according to Uber Newsroom, real-time earnings is a key feature:

Instead of waiting for weekly payments or cashing out through Instant Pay, drivers and couriers will have real-time access to their earnings after every trip through the Uber Debit account.

As you may have inferred from the words “through the Uber Debit account,” Uber Money comes with an Uber Debit account. It also comes with an Uber credit card, Uber Cash, and Uber Pay—all conveniently wrapped up in a product they’re calling Uber Wallet.

These days it’s almost trite to observe the number of tech companies starting to play bank. Perhaps you have heard of Facebook, Google, Apple, IBM, and more. 

As gig apps go, Uber’s stab at becoming banklike isn’t particularly unique; it’s just the latest to make headlines. Every gig app, from Airbnb to Wag! to DoorDash is arguably playing bank by virtue of collecting and distributing funds. Yet jumping on the bankwagon isn’t as simple as it may sound, as a number of non banks learned the hard way. The Financial Brand’s Jim Marous observed:

Despite the successes of many of these platforms, success is far from guaranteed. For instance, while Amazon and Airbnb have achieved extraordinary success with their platform strategies, Uber has been challenged to make money to date. Some of the reasons platform strategies can fail include: Getting the pricing wrong … Not establishing trust … Being late to the market … [and] Building platforms in low margin businesses.

Banks have long faced threats from Non-Banking Finance Companies (NBFCs), under which Investopedia lumps “insurance companies, money market funds, asset managers, hedge funds, private equity firms, mobile payment systems, micro-lenders, and peer-to-peer lenders.” The thin line separating NBFCs from banks is the former’s inability to offer demand accounts. Still, NBFCs quack a lot like banks, which has not a few bankers concerned, for NBFCs “are not subject to the banking regulations and oversight by federal and state authorities adhered to by traditional banks.”

But banks must now also contend with fintechs, which are highly skilled at quacking like ducks in their own right but are nothing like and not regulated like NBFCs. And, to the consternation of big banks, fintechs like Cambr are teaming up with and providing regulatory work-arounds to small banks. According to the Los Angeles Times:

A tech company or start-up might give Cambr as much as $100 billion of customers’ cash, and could then ask the service to spread the money around to potentially hundreds of different financial institutions. A result of spreading out the deposits is that more of the fintech’s cash is insured under the Federal Deposit Insurance Corp.’s $250,000-per-account guarantee, offering more coverage than if the money were deposited at a single institution … many community banks have embraced such partnerships, seeing them as a salve in times of digital disruption. More deposits can allow small banks to grow and make more local loans.

So, it’s true that Uber wants to be a bank. So does about everyone else and their dog. “Retail banks losing the race to challengers in the last mile,” Finextra recently trumpeted, citing Capgemini and Efma’s World Retail Banking Report (WRBR):

Capgemini surveyed over 7,900 retail banking customers from 20 countries and sought responses from more than 50 banks for the report, which found banks have the right products, but they are lagging behind and giving ground to non-traditional players in the last-mile customer experience, ie what customers see and remember … The WRBR notes that the top three reasons customers say they turn to financial products from non-traditional players include lower costs (70%), ease of use (68%), and faster service (54%).

The lesson from the WRBR and from Cambr, however, doesn’t seem to be that fintechs are a problem so much as a potential solution. Finextra continues:

The WRBR says banks can address these challenges by partnering with fintechs to focus on the customer overall financial wellness, rather than discrete banking products. Says Bose: “Banks that identify their top capabilities and then seek partnerships with FinTechs and other business sectors to enhance their offerings in other areas will be the most successful.”

I am by no means the first to point out that fintechs may offer banks as much if not more of a solution than threat. In his Financial Brand piece, “4 Myths Preventing More Fintech+Banking Partnerships,” CEO at StoneCastle Partners CEO Josh Siegel wrote:

Solutions exist that make it easier for both sides to participate in building the next generation of financial services. By serving each organization’s needs and simultaneously streamlining what each must accomplish, these partnerships help move innovative — and fully compliant — products to market. 

Banker, know thine enemy. Maybe it’s not fintechs after all.

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