How Fintechs Disrupt Deposits to Acquire Primary Banking Relationships
By David Evans, Chief Content Officer at The Financial Brand
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Rather than competing for checking or savings accounts directly, successful fintech disruptors are exploiting a strategic backdoor: Delivering integrated payment experiences that combine debit cards, buy now pay later, digital wallets, and P2P transfers into unified platforms.
New J.D. Power data reveals this “deposit disruption” is already causing measurable customer attrition among incumbents. Yet many banking executives operate under dangerous misconceptions about who uses these products and why. Banks that fail to match these full-spectrum payment offerings face accelerating customer losses; only those moving decisively to integrate competitive debit rewards, BNPL options, and strategic payment features will be able to successfully defend their deposit base.
Need to Know:
- Fintechs are leveraging payments as a backdoor to deposits: Disruptors aren’t competing for traditional accounts—they’re capturing primary relationships by controlling everyday spending through integrated payment platforms that banks largely haven’t matched.
- Buy now pay later is now mainstream: Contrary to industry assumptions, BNPL users now mirror average American consumers demographically and financially, not just younger or credit-challenged segments, making this threat universal. Only 3 of the top 10 U.S. banks by deposits offer fixed installment purchase plans comparable to buy now pay later products, and not all market them aggressively
- Debit cards remain the most-used payment method: Despite executive perceptions that debit is a commodity, it’s used more frequently than cash or credit in the U.S., and fintechs are weaponizing differentiated debit experiences to unseat incumbents
- Time is running out for slow movers: J.D. Power churn data shows banks that aggressively market integrated payment features suffer less attrition, while those treating payments as digital add-ons are losing customers at accelerating rates. Many banks that offer instant payments via Zelle treat it as a digital add-on rather than a strategic deposit defense tool, failing to invest marketing dollars proportional to the competitive threat.
- Full-spectrum apps are the new standard: Consumers increasingly demand unified experiences combining debit, BNPL, wallets, and money movement—and fintechs are delivering while most banks offer fragmented, siloed products.
Payments as the New Primary Relationship
Fintechs have identified and exploited what Sean Gelles, Vice President of Banking and Payments Intelligence at J.D. Power, calls a critical vulnerability: payments can be the route to primary deposit relationships.
“What fintechs did is they realized that payments were a backdoor to the actual deposit relationship and they exploited that,” Gelles explains. “The brand that can get in there and control that everyday spending and everyday transacting is very much a threat to the incumbent.”
How serious is the threat? The disruption is measurable and accelerating. J.D. Power’s payments data and churn studies reveal that fintechs are systematically attriting traditional banking customers by offering what Gelles terms “full spectrum” financial apps. These platforms integrate debit cards, buy now pay later functionality, digital wallets, and P2P transfers into seamless experiences that banks have largely failed to match.
Encroachment, not conversion Fintechs aren’t asking consumers to close their bank accounts and open new ones. They’re simply offering superior payment experiences that gradually shift primary financial activity away from traditional banks. By the time institutions notice the deposit drain, the relationship damage is already done.
What makes this particularly dangerous is the speed differential. Large banks iterate slowly by nature, treating payments innovations as digital add-ons rather than strategic imperatives. Fintechs can ship new products as soon as they identify opportunities. “That’s going to be tough,” Gelles notes. “We’re going to see some tumultuous years ahead.”
The Three Dangerous Myths That are Costing Banks Customers
Banking executives operate under misconceptions that directly contribute to their competitive vulnerability. Gelles identifies three prevalent myths that J.D. Power data conclusively refutes.
1. BNPL users are lower-end consumers banks don’t need to prioritize. Many senior banking executives dismiss buy now pay later as a product for financially stressed or younger demographics outside their core customer base. The data tells a different story. “Buy now pay later consumers are increasingly looking like your average American, your average U.S. consumer,” Gelles reports. “They’re pretty much identical. We’re seeing buy now pay later become mainstream.”
While younger consumers spearheaded adoption, BNPL has crossed demographic boundaries. The typical user is making calculated decisions about payment methods for specific purchases. Banks that dismissed this segment as unprofitable are now losing mainstream customers they previously considered secure.
2. BNPL users can’t qualify for credit cards. This assumption particularly surprises Gelles, given the available data. “Most buy now pay later users already have credit cards,” he emphasizes. “They’re using buy now pay later because they feel it’s a more competitive product for the use case they have in front of them.”
BNPL is simply better Consumers are choosing BNPL because it offers superior value for certain purchases. They cite cost effectiveness, predictability, transparency, and crucially, better budgeting control. Consider the consumer math: 50% of Americans don’t pay off credit cards monthly. For these consumers, comparing the known cost of a BNPL loan against uncertain credit card interest makes BNPL the more responsible choice.
Learn more from Sean Gelles at The Financial Brand Forum 2026.
Don’t miss Sean Gelles’s breakout presentation, “The Payment Revolution: How Next-Gen Consumers Are Rewriting the Rules” — a session loaded with proven strategies and real-world examples you can put to work immediately.
Meet Sean in person live at the Forum 2026, and see his inaugural session which is bound to be standing-room-only!
“It’s not that these consumers are irresponsible,” Gelles clarifies. “It’s actually that they’re being fiscally responsible. That’s why they want to use buy now pay later. That’s why they want to use debit cards.”
3. Debit card experiences don’t matter because debit is a commodity. Many incumbent executives view debit cards as undifferentiated products that customers barely remember they have. This might be the most dangerous misconception.
“When you look at the J.D. Power data, debit cards are the most frequently used payment method in the United States,” Gelles reveals. “It’s used more frequently than cash and credit cards.”
Aggressive fintechs understand this reality and are weaponizing it. They’re offering differentiated debit cards with rewards programs, budgeting tools, and integrated features like embedded BNPL. Affirm and Klarna specifically designed debit cards with built-in installment capabilities. These aren’t marginal product improvements—they’re strategic tools for capturing primary relationships.
“To ignore that debit card experience is perilous,” Gelles warns, “because that’s how the challengers are getting in, that’s how they’re unseating the incumbents.”
The Incumbent Response Gap
Only three of the top ten U.S. banks by deposits offer fixed installment purchase plans that rival buy now pay later products. Among those three, not all market these offerings aggressively. Most banks now offer Zelle or similar P2P capabilities, but they treat them as features rather than strategic weapons, available in the app but rarely promoted with meaningful marketing investment.
“It’s in the app, it’s there, and you’re one and done,” Gelles observes. This hands-off approach reflects a fundamental misunderstanding of the competitive dynamics. Fintechs view payment features as customer acquisition and retention tools worth aggressive marketing investment. Banks treat them as table stakes functionality requiring minimal promotion.
The churn data reveals the consequences. Banks that match fintech payment offerings and market them seriously are defending their deposit bases successfully. Those dragging their feet are suffering measurably higher attrition. “The brands that are staying ahead of this and that are meeting these fintechs head on, they’re not suffering as much from the attrition,” Gelles notes. “The ones that are dragging their feet are.”
Some executives believe they have time to catch up, but Gelles is “actually surprised by how slowly a lot of the incumbents have moved on this.” The window for comfortable adaptation is closing. Consumer behavior is shifting structurally, and fintechs are moving quickly to cement these new patterns.
How Can Banks Defend Their Turf?
Banks need not surrender to inevitable disruption. The institutions successfully defending their positions share common characteristics:
- They’ve recognized payments as strategic rather than tactical,
- They’ve invested in developing competitive full-spectrum payment experiences, and
- They’re marketing these capabilities as aggressively as fintechs do.
The technical requirements are clear: integrated debit rewards programs, embedded or partnered BNPL functionality, strategic promotion of P2P and account-to-account transfer capabilities, and unified app experiences that combine these features seamlessly. The cultural requirements may be more challenging: treating payment innovation as a survival imperative rather than a feature enhancement project.
The next threat? Looking three to five years ahead, Gelles sees additional disruption emerging from AI-powered shopping agents. PayPal, Samsung Wallet, and other platforms are building AI shopping assistants into their app experiences. “These are actually interesting to a lot of consumers,” he notes, though he cautions this represents a secondary wave following the current payment disruption.
