JPMorgan Chase launched its Finn by Chase standalone mobile bank account nationally with much fanfare less than a year ago. This was going to be how Chase attracted the millennial crowd to the bank with a cutting edge app loaded with features the younger generation demands. But it never seemed to be getting the traction that Chase wanted. I reported last month on a survey that said Chase had signed up just 47,000 Finn accounts.

Today, the Wall Street Journal is reporting that the largest bank in the country is shutting down Finn by Chase and moving everybody to a regular Chase account effective August 10. Customers will have to download the Chase mobile app and will receive a new Chase debit card but many of the features of Finn have been rolled into the Chase app, including no fees. There is one feature missing, though, and that is free ATM usage at partner ATMs.

What does this mean for other banks digital efforts? The only other large bank with their own standalone mobile brand is Greenhouse by Wells Fargo and that is still in limited rollout. Citi is creating a national digital bank but has not created a new brand. Bank of America has their virtual financial assistant called Erica but it is linked to their regular mobile app.

Maybe the large banking brands will recognize they don’t need a separate brand to attract the younger generation. In this American Banker article today Chase spokesperson, Pablo Rodriquez, said:

We know the Chase brand is already among the most popular banks for millennials, so we’re leaning in on that, rather than continuing to build a brand from scratch.

Apparently, many of the people who signed up for Finn were existing Chase customers, in fact it was more than half their customer base.

My Take

I don’t think that anyone will argue that banking is going mobile. While branches may remain important for many years or even decades the mobile app is going to be the cornerstone of any bank offering of the future. The reality is that today, more than a decade removed from the financial crisis, most large banks have trusted, if not loved, brands. There is no compelling reason to create a new separate brand to win mobile customers.

What consumers want from banks are better mobile features. The reason that consumers have flocked to many of the challenger banks is because they offer the features they want. To be successful today banks need mobile apps with simple mobile on-boarding, high interest checking accounts, no overdraft fees, no ATM fees, check deposit and budgeting tools. Obviously, a pleasing user interface is also a requirement but this is not rocket science.

Rather than continue to prop up a failing app Chase pulled the plug quickly and now can put its resources into making their regular app better. Whether this is the death knell for other banks with separate mobile brands remains to be seen but this move by Chase will certainly give others pause before pursuing that path.

I spent two days in Phoenix this week at the CFSI Emerge Conference. This an annual event put on by CFSI (now called the Financial Health Network) focused on financial health. There were several excellent sessions but the one that I keep thinking about was one about employer innovation in financial wellness. The speakers were Peter Hazlehurst, the Head of Payments and Risk at Uber and Shawn Leavitt, the SVP of Total Rewards at Comcast.

What was fascinating to me was how much financial services is a central part of their businesses, particularly in the case of Uber. They were one of the first companies to make payments frictionless and invisible and they continue to break new ground when it comes to financial services.

Let’s start with small dollar lending. Uber issues drivers a debit card where they can receive their earnings but they can also go negative on the balance of that card up to $100. So, when a driver has a zero balance on their card they can still go and fill up with gas before they start their shift. What is also really innovative is that Uber allows for almost real time earnings. Drivers can request their balance be sent to their debit card up to five times a day.

For some drivers they literally have no money. So, when they wake up in the morning they desperately need to earn money from Uber to survive. So they will drive for a couple hours and then be able to afford breakfast, a few more hours then lunch and more hours in the afternoon and they can feed their family at dinner. This real time payment is powered by Visa Direct as they can push money to a debit card for very low cost. This could become a model for many other industries as employees and contractors demand payment quickly for work already done.

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When we hear of fintech companies that achieve significant scale at a rapid rate they are often in the personal loan space or perhaps even larger dollar loans like mortgages. These are well established verticals which can be entered with relative ease and are in turn well understood assets from an investor perspective. We recently became aware of a company launched in early 2018 which is already lending $110 million per month in a market often ignored: solar.

I had the opportunity to talk to Hayes Barnard, the Founder and Executive Chairman at Loanpal to learn more about the business and what makes the solar industry so attractive. Barnard is no stranger to the solar market or even lending. Combined, the solar business and a mortgage business he founded in 2003 have lent over $27 billion. He leaned on his experience, which included being CRO at SolarCity (now Tesla) where he managed a team of 8,000, to tackle solar financing.

The impetus for starting the business was that financing needed to catch up in the solar business. One of the main challenges is getting banks and other investors to understand the asset class. He also sought out to understand why homeowners were disqualified for solar, which sometimes relates to unforeseen project obstacles like doing a main panel upgrade or doing rafter and roof work which are needed to get a home solar ready. He set out to create a financing company that has the ability to say “yes” more often and after a year of building the technology he created his fintech company all centered around his passion of what he likes to call “world-positive lending”.

Loanpal prides itself on providing instant decisioning, not just pre-approvals to their borrowers. Beyond focusing on improving the consumer experience and working on better underwriting, they had to build up two other sides of the business, one for their partners and the other for investors.

On the partner side, Loanpal works with 80% of the top 50 solar providers in the U.S. and works with 130 solar partners overall. They currently capture 21% of new residential solar loans making them a leader in this space. They spent time building integrations directly with contractors via APIs, through the tablet and programs that installers were already using. At the outset this results in a different customer experience where financing happens at the point of sale. Barnard noted that they are embedded into the process, similar to what Square does. Loanpal has also worked to make sure they work with their partners’ ERP systems to improve efficiency for larger scale organizations.

On the backend, Loanpal has built an investor portal which interacts with large institutional capital. It allows their investors, where they have forward flow agreements, such as Goldman Sachs and other banks to view a realtime rate of return. Loans are first funded by a warehouse line but are quickly sold off to investors in pools of loans. One thing that makes solar unique is that often these loans are eventually either rolled into a first mortgage by the homeowner or the homeowner ends up moving. While on the surface a solar loan might be a 15 year term, investors are actually turning over their capital much quicker and capturing a dealer fee, increasing the rate of return. Loanpal now has a significant amount of data on the assets which has helped educate investors and ultimately driven down the cost of capital.

So where does Loanpal go from here? Bernard has ambitions to originate several billion in loans to further the solar cause which is certainly achievable given solar only has 2% penetration across the US. The demand and interest in solar is increasing and consumers, especially those in the millennial generation want to do the right thing and use clean energy. Folks who have previously been ready to move to solar now have the choice to make the move with the help of financing. This coupled with the decreasing costs of solar and some of the positive conversations happening with local utilities and state governments will only help move us forward. A perfect example of this is the recent news of California requiring solar panels on all new construction.

Beyond solar, Barnard is trying to tackle other areas that fall into creating a conduit to doing world positive banking. He hinted at some things they are thinking about related to new ways to unlock capital for homeowners, which might include things like converting outdated homes to smart homes, expanding into a variety of products and solutions such as energy efficient HVAC, roofing, etc. Ultimately the goal of the company is to lower our carbon footprint.