With its payment service Cash App, Square took advantage of the situation of crisis to familiarize the American people to the mobile bank.
They are sexy, fast and not expensive, and continue to conquer hundreds of thousands of Europeans. Yet, the neo-banks, such as N26, Revolut and Monzo still have a long way to go if they want to achieve a certain profitability in their model, which can be solved with an acquisition of more than 50 or even 100 million customers.
Unfortunately for them, the journey is fraught with pitfalls : an ocean to cross to get to the United States, where the market is an eldorado in terms of size and in view of the number of people without a bank account. A difficult journey all the more impacted by an unprecedented crisis, health-care, and then quickly economic, in which the neo-banks – still dependent on their fund-raising – are beginning to show signs of weakness because of their youth.
Rise indicative of direct deposits
But behind this blur tricky for the best banks online, some companies on the landscape fintech arrive all the same to pull their pin of the game. One of the most known worldwide, the American Square (headed by the CEO of Twitter Jack Dorsey), has also reveal very important information on the result of his adventure on american soil.
According to a study published by Credit Suisse, the application of Cash payment App Square has seen the number of its users set up their account with direct deposit from 500 000 at the end of march to 1.2 million today. According to the graph generated by our confreres of the magazine Forbes, a projection on the rest of the year would bring Cash App to reach 2 million users using the application for direct deposit.
This is a key point. Cash App could make its next goal : to set up the direct deposit on their application, users are as well Cash App their digital portfolio main. The dramatic increase put forward by the study would certainly not have seen the light of day without the epidemic of COVID-19, and the policy of helicopter money from the administration.
Cash App store to a complete digital
Chime, the digital bank is the most popular in the United States, is a direct competitor to Cash App. In advance on the tools Square, the establishment shows for months now that a client using direct deposit is a strategic client. In its offer of banking, the bank even went so far as to strongly recommend users to configure the tool so that they can then access features reserved.
Until the crisis of the COVID-19, Jack Dorsey and his team had never followed the same strategy. But since then, a major opportunity is on the way of the services of digital payment : the cheque for stimulus of the federal State, the United States. In a few days, a series of tweets has been published by the man at the head of the Square to promote Cash App, which could come to the aid of the State in the delivery of its 1200 $ to help.
It is thanks to this that the application has very quickly saw its users to configure their account to receive their ” stimulus check “ so cloud, directly on their smartphone. A first step in the world of banking, with the ability for these customers to be able to be paid directly on the service for their work, for example.
The study of Credit Suisse believes in the ambitions of the Square from this trend to become a truly digital bank. Responsible for the study and analyst, Timothy Chiodo reported : ” We believe that they will be added budgeting tools and capacity-payment of bills “, before mentioning the arrival of credit cards, and bank loans.
Bad news for the neo-european banks
In December 2019, Cash App there were no fewer than 24 million active users. The income of the application have reached 528 million dollars of revenue in the first quarter, and Square can also be based on the services that it has put in place a online traders, forced to find a payment solution to digital in order to save their activity online.
With this background, Square don’t expect more than a change of habits, in a country where the fintech and, in particular, the neo-banks are not yet very popular. N26, Revolut and Monzo, who had made the bet to settle there. But with an actor like Square, which seems to take its marks on the multiple services which are today the landscape fintech, the neo-european banks face an additional difficulty.
On the New Continent since July of 2019, the neo-German bank N26 took a symbolic decision two weeks ago. In spite of its more than 250,000 customers in the United States, 10 % of its workforce on site has been licensed by particular economic concern, because of the outbreak of coronavirus and the fall of the consumption of the customers. The dreams of conquest of the West fall, and the duration of the crisis will be decisive for whether or not the forces of the neo-european banks to compete with Square.