How has the landscape changed between 2022 and 2024?
Comparing our 2022 data to data from July 2024 shows the market has matured. Not only has the number of challengers increased, giving Americans more choice, but apps have also become more feature-rich.
Collectively, the 22 challengers in our 2024 data-set have 3095 functionalities, an 82% increase over our 2022 data-set. Ally and MoneyLion made the biggest increases, adding 85 and 157 functionalities respectively. They now have 256 and 255 functionalities, overtaking SoFi as the most feature-rich US challengers.
Out of the 16 challengers who were also in our 2022 data-set, 8 have decreased their functionalities. Stash in particular reduced functionalities in four categories: accounts, money transfers, cards, and personal financial management. This is probably because it has pivoted more towards investing, even adding 23 new wealth management functionalities.
Where are challengers investing in 2024?
The category with the greatest number of functionalities in 2024 is cards, at 512.
But, if we look only at the 16 challengers who were in our 2022 sample, it's wealth management that has seen most growth, with 152 functionalities added over the past two years.
McKinsey notes that, while investments have generally underperformed during this period, demand for wealth management services is on the rise. More significantly,
$84 trillion in assets are in the process of being transferred from baby boomers to digital natives.
From this perspective, challengers' investment in wealth management functionality isn't surprising. If anything, it feels like they could be doing more to take advantage of the opportunity.
As things stand, 9 out of 22 challengers in our 2024 data set don't offer any wealth management functionality. As for personal finance management — increasingly viewed as integral to a holistic approach to wealth management — the challengers in our sample collectively added 16 functionalities and removed 8, meaning they have work to do in this area, too.
The category with the least functionality in 2024 remains junior accounts.
In 2022, only two of the challengers in our sample had any junior account functionality:
Stash, which had 7 functionalities, and Ally, which had 1.
In 2024, only three challengers out of the 22 in our data set have junior account functionality.
What's next for US challengers?
Over the past two years, challengers have been remarkably resilient and adaptable in a tough landscape. But while choice and functionalities have increased, there still isn't much differentiation.
Ally has the biggest number of unique features: 32. Up from just 8 in 2022.
Monzo US comes in second, with 23, while SoFi and Stash's unique features decreased from 34 and 15 respectively in 2022 to 6 and 4 in 2024. The remaining challengers in our sample have 10 unique features or less.
Needless to say, unique features don't necessarily make banking apps better. What their absence does tell us, though, is that there seems to be little appetite for risk-taking. Challengers' apps all do fairly similar things in fairly similar ways.
More to the point, the dearth of junior account functionality feels increasingly like a huge missed opportunity.
Junior accounts foster brand loyalty from an early age, generate revenue, and parental oversight means they're relatively low-risk products. So, the fact that so few challengers have entered the space is puzzling, to say the least.
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