Americans suffering from a cash flow crunch have long turned to help from three financial sources that run the spectrum from saviors to predators: friends and family, overdraft protection, and payday loans. The options have broadened considerably, however, as fintechs positioning themselves as consumer advocates entered the market with short-term, small-dollar options that offer interest-free pricing and helpful digital financial fitness features. And now recent government guidance has led Huntington Bank, Wells Fargo, and others to counter with innovative products that not only charge less in terms of Javelin’s analysis based on annual percentage rates but also could rebuild trust in FIs. This report analyzes the landscape of fintechs and the threat they pose to banks and credit unions, compares pricing and features of leading short-term loan options from fintechs and banks, and showcases financial fitness features that FIs can emulate.

Key questions discussed in this report:

• What are the leading fintechs in the market of short-term digital lending?
• How are fintechs undermining primary FI relationships?
• How do the fintechs' products and pricing compare with new no-interest loans and lines of credit from banks?
• What can digital banking strategists learn from fintech lenders in terms of best practices and financial fitness features?
• Is there a market opportunity for banks and credit unions in short-term lending?

Companies Mentioned:

Advance America, Albert, Bank of America, Branch, Brigit, Chime, DailyPay, Dave, EarnIn, Empower, Even, FinFit, Galileo Financial Technologies, Huntington Bank, Klover, MoneyLion, Payactiv, Plaid, Regions Bank, SoLo, U.S. Bank, Varo, Wells Fargo