Fifth Third Bank, a 163-year-old institution with $207 billion in assets, recently launched Fifth Third Momentum Banking, a digital solution focused on meeting the everyday banking needs of customers. The product aims to combine the modern features of a digital bank with the security and local presence of an established financial institution.
Momentum Banking has no monthly service charge and no minimum deposit required to open a checking or savings account. Its different features are aimed at helping consumers to easily send and receive payments, avoid cash shortfalls, and achieve their savings goals quicker. A notable feature is MyAdvance, which advances funds of $50 or more to customers against future direct deposits.
“Research tells us that one in three Americans is living from paycheck to paycheck. This makes MyAdvance very useful, as it essentially lets you borrow from your future self,” said Melissa Stevens, executive vice president and chief digital officer at Fifth Third Bank. “You can simply log into the app and pay a small fee to get early access to your funds, and then pay yourself back when the next direct deposit comes into your account.”
Another useful feature is Immediate Funds, which makes check deposits instantly available for customers. “Lots of times, there's a hold on your deposit with banks, because they need to make background checks,” said Stevens. “But if you want, you can pay a small upfront fee in the mobile app, which will give you full access to those funds immediately upon putting that check in the deposit.”
Other features include Early Pay, which provides customers with free access to payroll up to two days in advance, and Extra Time, which allows additional time to make a deposit and avoid overdraft fees. Also included is the Dobot Savings App, which was a standalone mobile app for personal finance and savings, and has now been integrated into the Momentum Banking offering.
Stevens says that even though there are many fintechs offering similar services, what distinguishes Momentum Banking is its much greater focus on human interaction. “We’re a real bank with real human beings, who are locally available to you by phone, instant messaging, or walking into a branch if that’s what you prefer,” said Stevens. “The humans are not hidden in our offering. Even when you enter the chat feature on our app, the menu immediately offers you an option to chat with a live agent instead of using the bot. We let everybody make that choice when they come in the door.”
Momentum Banking brings Fifth Third Bank into direct competition against the new digital banks that are flooding the market, according to Iliya Rybchin, a partner at management consulting firm Elixirr. His firm works with incumbent banks to launch digital banking products as well as with fintech startups to help them compete against traditional banks. “The good news: it’s fantastic that Fifth Third has taken the step to move into the digital space. They are clearly headed in the right direction,” said Rybchin. “The bad news: they are not doing enough. Although their product showcases a solid attempt by an incumbent company, it still lags behind the groundbreaking products being produced by new entrants.”
Rybchin says that while Fifth Third Bank is taking baby steps in the right direction, some of the new entrants are taking huge leaps. “Fifth Third’s digital product may provide a desirable user experience, but it doesn’t address the core business model. They are still a traditional bank, with traditional bureaucracies, banking staff, and cost structures,” said Rybchin. “The new players they are competing against are fast, agile, aggressive, technologically savvy, and most importantly, have an optimal cost structure that allows them to deliver their products faster and cheaper.”
Matthew Risley, a partner at venture capital firm QED Investors, seems to have a more optimistic outlook on Momentum Banking. “While I do think that all consumers want the digital experience pioneered by the neobanks, legacy banks that can provide a great app and can tightly marry that to their broad array of existing products have an opportunity to defend their market share amongst prime consumers,” said Risley. “In that context, Fifth Third’s new offering shows great promise in bundling a sharpened digital experience with assets like integrated lending and the bank’s extensive ATM footprint.”
Competing on technology alone is a losing battle, and Fifth Third Bank’s people-centered approach may give it an edge over some fintechs in the market, according to Craig J. Lewis, founder and CEO of Texas-based digital payroll platform Gig Wage. “What do traditional banking institutions have that neobanks don't? Charters, buildings, and people. Using those to your advantage is smart. That doesn't mean it's a winning approach, but it's an angle you have to play as a legacy financial institution,” said Lewis.
“This isn’t just a 'banks vs. fintechs' scenario – the battle is horizontal across all sectors. Can the incumbents innovate faster than the start-ups can get distribution? It'll be interesting to see how things play out.”