Will neobanks force incumbents to address financial inclusion?
Neobanks are targeting less wealthy people in both developed and developing markets – a constituency that has traditionally been neglected by incumbent banks because of legacy costs. But it’s an increasingly political issue and where does this leave people who still need access to cash and branches?
Elizabeth Warren was furious at the Senate banking committee hearing this May and her anger, not for the first time, was directed at Jamie Dimon, chief executive of JPMorgan Chase. Warren, a former Democratic presidential contender, accused Chase of being the biggest beneficiary of what she said were billions of dollars in overdraft fees charged by banks during the pandemic.
“No matter how you spin it, this past year has shown that corporate profits are more important to your bank than offering just a little help to struggling families, even when we’re in the middle of a worldwide crisis,” the senator fumed, after Dimon flatly refused to refund the fees.
According to Dimon, Chase waived overdraft fees for customers under financial pressure because of the pandemic, but only if they asked for it. Warren’s choice of topic had added resonance and added irritation for the big banks because of the recently accelerating growth of new digital rivals.