Banks Can’t Win Tomorrow with Yesterday’s Customer Experience
By Jessica Kendall, Contributor at The Financial Brand
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Retail banks face a more consequential competitive shift than many executives recognize. According to Rex Salisbury, founder of Cambrian and an early-stage fintech investor, the greatest threat is not a single challenger bank or digital wallet, but a structural change in how consumers and businesses access financial services.
Fintech firms that once served younger or lower-income customers are moving into the mass affluent segment, while software platforms increasingly embed financial products directly into business workflows. In a recent episode of the Banking Transformed podcast, Salisbury argues that customer expectations, business models, and technology capabilities are changing faster than many incumbent institutions are prepared for.
Why this matters: : From wealth management to small business lending, customers increasingly value integrated digital experiences, faster execution, and transparent value. For banking leaders, the central question is less whether disruption is coming and more how institutions will adapt their operating models to compete for the next generation of customers.
Need to Know:
- Mass affluent customers are becoming a competitive battleground. Firms like Robinhood and Chime are increasingly targeting customers once considered firmly within the core franchise of traditional banks.
- Product experiences and business models matter equally. Fintech competitors are succeeding by pairing intuitive experiences with monetization models that support better pricing and rewards.
- Wealth transfer will reshape expectations. Younger inheritors expect digital convenience, integrated services, and fewer manual processes than traditional wealth relationships often provide.
- Embedded finance is changing business banking. Vertical software providers increasingly deliver lending, payments, and treasury functions directly inside operating systems for businesses.
- Deposit inertia may weaken. Faster payments, higher-yield alternatives, and automated money movement could place new pressure on traditional deposit economics.
How the Competition Has Changed
For years, banks viewed fintech competitors as niche players serving customers outside the traditional banking mainstream. Early challengers often targeted younger consumers, gig workers, or lower-income households that large institutions struggled to serve profitably. That framing is becoming outdated.
According to Salisbury, fintech firms are increasingly competing for the mass affluent customers that many banks care about most. For example, Robinhood, once seen as a platform for casual investing and speculative trading, now serves millions of customers with balances approaching those of traditional banking relationships.
While customer expectations have changed, many incumbent experiences have remained largely the same. And, once customers encounter better, more modern products, they don’t go back to traditional banking experiences.
The concern is not sudden customer flight. Instead, the challenge resembles slow attrition occurring over several years. Younger customers may never establish their primary banking relationships with traditional institutions in the first place. Others maintain accounts at banks while shifting meaningful engagement — investments, payments, borrowing, or deposits — to newer providers.
Key takeaway: measuring customer loyalty solely through account retention increasingly risks missing the broader picture. Deposit balances, engagement levels, and share of financial activity may offer a more accurate view of competitive pressure than customer counts alone.
Why Fintechs Compete Differently
Salisbury argues that many banks underestimate fintech competition because they focus primarily on digital interfaces rather than underlying economics. But, the strongest challengers pair compelling customer experiences with business models designed differently from traditional banks.
Again, Robinhood offers a good example. The firm combines brokerage revenue, subscription products, and cross-selling to support offerings that would be difficult for many banks to match economically. High-yield accounts, generous rewards, and streamlined onboarding work because the company monetizes customers differently.
Banks, by contrast, often evaluate profitability product by product. Deposit teams protect funding costs. Card teams optimize interchange. Wealth teams focus on assets under management. The result can create organizational friction that makes it harder to design experiences around the customer rather than internal business lines.
Salisbury believes this structural challenge matters as much as technology itself. For instance, improving mobile functionality alone will not solve competitive pressure. Institutions also need to rethink incentives, cross-functional ownership, and how products work together across the customer relationship.
Key takeaway: The institutions best positioned to compete may be those that think in terms of integrated customer value rather than standalone products.
Wealth Transfer Will Raise Expectations
The coming great wealth transfer receives substantial attention across banking, but Salisbury argues the bigger challenge may be customer expectations rather than simply asset movement. Millennials inheriting wealth often expect financial experiences to resemble the technology products they already use: fast, intuitive, and accessible without friction.
Traditional wealth management experiences frequently rely on personal relationships, office visits, paperwork, and advisor-led service models. While high-touch relationships remain valuable for many clients, Salisbury believes younger generations increasingly expect digital self-service alongside human guidance.
He points to frustrations that seem increasingly difficult to justify in a digital economy:
- Waiting days to move money
- Calling an advisor to complete routine transactions
- Managing taxes, estate planning, and wealth separately
- Navigating fragmented digital experiences
Instead, customers increasingly want integrated financial ecosystems that connect investing, banking, tax planning, and long-term financial management.
Salisbury predicts wealth management platforms will increasingly bundle services that historically operated independently. In this model, taxes, planning, lending, and investing become components of a single experience rather than separate relationships.
Key takeaway: For banks, this creates an opportunity as much as a threat. Institutions already possess trust, deposits, and customer relationships. The challenge lies in translating those advantages into experiences that feel modern, connected, and efficient.
Banking Is Moving into Software
Perhaps Salisbury’s strongest warning concerns business banking. Small businesses increasingly interact with financial products through software rather than financial institutions.
Restaurant owners, for example, may spend their day inside platforms that manage scheduling, payments, payroll, and operations. Lending becomes embedded directly into those workflows. Instead of visiting a branch or navigating lengthy underwriting processes, a customer receives financing inside the software already running the business.
Platforms such as Toast illustrate how financial services become part of operational infrastructure rather than standalone products.
Salisbury believes this trend will expand rapidly across industries as software providers for healthcare practices, salons, contractors, and professional services layer in payments, lending, treasury tools, and accounting capabilities.
The reality is that customer relationships increasingly form where financial decisions happen. This creates a strategic question for banking leaders: should institutions remain providers of standalone products, or become embedded partners inside broader financial ecosystems?
Salisbury does not believe incumbent banks are destined to disappear. Large institutions retain advantages in scale, trust, balance sheet strength, and complex commercial banking relationships. But he expects competitive pressure to intensify as fintech firms mature and AI accelerates operational change.
What this means: Banks will need a mix of building, partnering, and acquiring to stay relevant. The harder challenge may be organizational willingness. Many of the capabilities banks need already exist in the market. Adapting business models, operating structures, and customer experiences quickly enough to compete may prove far more difficult.
