What Does Finn’s Closure Mean for the Future of Digital Banks?

JPMorgan Chase announced yesterday in communications to account holders that it was closing its digital-only account Finn, launched about a year ago, with its testing phase taking place in the St. Louis market.

Finn, first announced in October 2017, launched to great fanfare and widespread media coverage, but over its short lifetime the bank never disclosed user numbers and the service apparently failed to gain traction. (Finn users will get special fee-free Chase accounts after the service closes for good later this summer.) Chase Support tweeted, in response to a “bummed” customer, “We’re bummed too. But, we’ve learned so much from Finn and our customers. Chase is a better bank because of Finn, and we’re excited to bring the best of it to all our Chase customers. Thank you for being on this journey with us. [blue heart emoji]”

Why did Finn fail to take flight?

One reason is that some users in existing Chase markets were reportedly directed to get standard Chase accounts rather than Finn accounts. The bank apparently feared cannibalizing its own accounts in markets with branches. This is likely an unjustified fear, as many users are comfortable holding multiple deposit accounts.

Finn was neither entirely digital nor entirely independent from traditional bank processes and practices. Finn was built on Chase’s existing backend, and still relied on some manual and paper-based processes. Finn’s marketing was modest and its strategy unclear, at least to outside observers.

Finn was mentioned sparingly on the bank’s earnings calls. In response to a question on a July 2018 earnings call, the last time it was mentioned, COO Marianne Lake called Finn “quite young,”which it was, and one digital innovation among many. Dimon chimed in to mention the bank hadn’t really marketed Finn. Eventually a series of digital videos were released but the marketing effort was modest at best. Lake concluded that analysts shouldn’t “focus overly on Finn,” but rather “think digital more broadly.” Chase’s digital budget was reported to be $11.5 billion for 2019.

A broad focus on digital seems to be what Chase is doing, unifying its efforts and shuttling Finn customers over to Chase accounts. For a time it appeared many banks would launch ancillary or parallel brands on modern cores and eventually switch their deposit bases over to the newer platforms, but so far this has been slow to happen, and Finn’s closure must be seen as a setback. But there are lessons in Finn’s execution that other banks should heed.

Finn, like Wells Fargo Greenhouse, its closest analog, was built on top of the bank’s existing infrastructure, rather than a new platform. Finn offered a different user experience (emoji-tagging of transactions!) but not significantly different functionality. Greenhouse offers users two accounts with an inherent budgeting mandate — one for bills and one for other spending.

Finn, unlike Marcus from Goldman Sachs, did not seek to lure deposits with high interest rates. Finn’s marketing was modest at best, with a squishy message and an uneasy relationship to the primary brand — Finn videos displayed a small JPMC logo but did not mention the bank. It is difficult to manage multiple brands with different messages.

The target market of Finn was not clearly defined. Young people that live in cities where Chase lacks a branch presence? Chase is already winning the mobile banking race, with over 34 million active mobile users. Finn, if not being used to disrupt the main brand, is superfluous.

Finn’s closure does not mean the end for digital brands or parallel banks from other institutions. It didn’t work for Chase, but it might work for a bank with a less insistent primary brand and a need to cost-effectively reach new markets, particularly younger customers. And it may still make sense to begin building a modern system of record and test it out inexpensively as a trial run for the rest of the deposit base.