Years from now, we'll be yarning about 2020 to anyone who will listen. It was a bizarre year, one that changed the speed and trajectory that technology impacts the financial services industry. From IPOs (failed and successful) to accelerated digital roadmaps, from Stripe getting into everyone's business and Goldman Sachs expanding into everyone else's, too, 2020 will be remembered as a pivotal year.
We decided to review the past year through the lens of Tearsheet's top stories, according to Google Analytics. The hope is, by doing this, we can make some semblance of sense of the year that was.
January 2020: ‘We sent 70 million text messages last year’: Stackin’s Scott Grimes
We were still pretty excited about text messaging at the beginning of the year, still in the halo of anticipation around chatbots and conversational AI that had been very trendy the past few years. The glow has definitely worn off, especially as users bumped into the customer service limits of chatbots while waiting for human help during the throes of the pandemic. But nevertheless, the writing is on the wall. Conversational AI and text/chat as a channel of communication will likely just grow from here
During the year, we didn't end up revisiting Stackin', an automated personal finance manager that tells you when to move money, save some, or invest surplus cash via text. But that sounds like a good idea. More so, we'll probably see other manifestations of personalized financial advice with little to no UI, delivered via the channels we spend most of our time in.
Greatest quote regarding chatbots in 2020: ‘Unleashing a chatbot on a customer is not improving customer experiences,’ Clickatell’s Pieter de Villiers
February 2020: Goldman Sachs is entering into the banking-as-a-service market
In February, we started to hear the rumblings that Goldman Sachs would soon offer a banking as a service competitor. Goldman is in the middle of a massive transformation into a retail bank with its Marcus brand, which now has close to $100 billion in deposits. Goldman is by far the biggest transformation story on Wall Street this year as the old-school, white-shoed investment bank and trading operation now more closely resembles a traditional retail bank.
Beyond Marcus, Goldman has entered into lending partnerships with Apple, Amazon, JetBlue, and Walmart. 2020 had Harit Talwar, who oversaw the entire move to Marcus, exit his role. Soon after, Goldman unveiled its TxB platform, a BaaS platform with APIs offering B2B transactional banking services. Marcus has plans to roll out more retail financial services in 2021.
March 2020: With Plaid partnership, Microsoft Excel is now a fintech app
Just as COVID-19 started to make its presence felt, embedded finance was starting to take center stage in 2020. The idea is that any piece of software or any firm in any industry can offer financial services. To do that, platforms offering banking, payment, insurance, and investing products have sprouted up. Firms like Apple, Uber, and Walmart offer financial services to their customers. Even Excel, the de-facto personal finance manager used by millions to do household budgeting, saw an integration with data aggregation firm, Plaid, to import personalized banking and payments data.
Plaid had an interesting year, too. The icon of open finance was acquired by Visa in January for $5.3 billion. The deal hasn't closed as the Department of Justice has gotten involved. In 2020, Tearsheet hosted its 2nd annual Embedded Conference and the inaugural DataDay Conference, aimed at the data aggregation industry and all the fintech and banking apps connected to data ecosystems.
April 2020: Domino’s employees can get paid after every shift
By April, bank branches were closing and employees were working from home as they sheltered in place. Incomes were at risk as a massive virus storm hit world economies. Getting access to earned wages became paramount for shift and gig workers. Domino's worked with Branch, the challenger bank that partners with employers, to offer its workers early access to earned wages.
Many challenger banks and fintech firms now offer the capability to get paid early. In fact, in 2020, focus moved away from the huge customers acquisition numbers new upstart banks were putting up. Instead, the industry began to drill down on how many of these new clients were actually using their new accounts. One way to encourage onboarding and active use is to get a customer to set up a direct deposit of their paychecks. To entice people to do that, firms like Branch offer users the ability to tap into their wages a couple days early before they post.
May 2020: Crisis Innovation: 6 big trends that financial services can take advantage of right now
This piece was written by Josh Liggett, who's an investment associate and fintech lead (and a former Tearsheet reporter) at OurCrowd, an equity crowdfunding platform. Josh saw the toll the pandemic was having on his portfolio companies, fintech founders, workers, and their families. Liggett describes how the pandemic accelerated fintech trends already well underway, like a move to contactless payments, bridging legacy systems, and remote work.
Indeed, firms had just weeks to move on digital transformation projects that they had scheduled to unfold over years. As customers could no longer reach services in branches, digital offerings became paramount for financial services companies both young and old.
June 2020: As Sesame Cash adds thousands of new users per day, Credit Sesame acquires Canadian challenger bank Stack
July 2020: Intuit introduces QuickBooks Cash, a new business bank account
June and July were kind of like a one-two punch for the two leading personal finance and credit managers. In June, Credit Sesame introduced its bank account, Sesame Cash, with an acquisition of the underlying technology provider, Stack. In July, Intuit launched QuickBooks Cash, a business bank account that integrates directly into its account software, QuickBooks. Both these offerings, one consumer and one business, are prime examples of how embedded finance empowers companies adjacent to banking to offer powerful financial products that provide immediate value to their ecosystems.
August 2020: Google to start offering bank accounts in 2021
Big tech has been rumored to be entering into banking for years. By August, news got out that Google was preparing its banking offering. Along with banking partners like Citi and Stanford Federal Credit Union, the tech firm would offer basic personal accounts. It wasn't until later in the year that those plans were publicly clarified -- Google would revamp Google Pay, offering Plex accounts powered and co-branded by its banking partners. These new accounts shift power and influence within the banking ecosystem, impacting both challenger banks' growth prospects and incumbent banks' abilities to scale.
September 2020: ‘Say goodbye to these relics’: Ally’s new campaign positions going to the bank as a thing of the past
By September of this year, it began feeling like we'd never venture outside and into a bank branch again. Ally Bank, with a new ad campaign, played right into those feelings by comparing a bank branch to banking relics like the pneumatic tube and pen chain. Humor aside, banking has continued to move online throughout this year. It wasn't uncommon for firms this year to experience massive surges in traffic and usage on their digital channels, way above historical norms.
October 2020: ‘We want to get to a segment of one’: Inside Citi’s 5 year plan for digital
As COVID-19 disrupted plans, new ones were formed. Priorities are shifting as customers are hurting financially and require more ways to get advice and transact digitally. Large banks, like Citi, revisited their multi-year plans in light of the pandemic. With mobile usage up, frictionless banking becomes more of an aim. Personalization continues to be a priority as financial institutions want to give their customers a deeper and wider view of their financial health. Banks are still working on creating unified experiences, so that customers can begin in one channel and end in another.
November 2020: With new products by PayPal and Revolut, cryptocurrency is making its way into mainstream
Looking back on 2020, cryptocurrency took major steps toward becoming more accessible. The fact that bitcoin prices soared during the year also brought more attention. To bridge the gap to main street users requires popular financial services firms to remove the friction around buying, selling, and investing in crypto. That happened this year as PayPal rolls out crypto functionality to its 300+ million users globally. Square's Cash App now generates billions of dollars in revenue for the firm in crypto trading revenues. Revolut expanded its crypto services in the US in July. Coinbase launched the Coinbase Card to spend crypto anywhere. Card incentive programs are beginning to include bitcoin-denominated rewards, too.
December 2020: Is Stripe Treasury ‘game over’ for banking as a service?
This year saw Google move into banking. It also saw Stripe continue to expand its services into new sectors of the industry. In December, Stripe Treasury launched in closed-beta, giving challenger banks and platforms, like Shopify, banking as a service functionality. Stripe is making its way toward public markets, eyeing a potential $100 billion IPO. It's incredible to witness the influence and power the payments infrastructure firm has. By adding a few lines of code, it can move into entire subsectors of financial services, becoming a powerful competitor everywhere. As the embedded finance trend expands, we can expect to see adjacent firms move in with competitive offerings.