Mobile banking heats up

American banks are minting money. In 2018, they made $237 billion in profits, bringing their average return on assets to an extremely healthy 1.35%. That's up from 0.97% in 2017. With banking so profitable, a lot of new players are looking to get in on the game, or to increase their market share.

The big picture: In a tech-obsessed world, a broad range of institutions have decided that the future of banking lies in apps. The logic is simple: Increasingly, Americans want to bank on their phones, rather than in expensive-to-maintain branches, so banks should give them what they want.

• Goldman Sachs, which already has an online savings account called Marcus and a cash-management app called Clarity, is reportedly going to launch a new card designed for iPhones in particular. Expect something beautiful, designed by Apple.
• Aspiration, an eco-friendly mobile-first bank, has relaunched its product with a slew of attractive features including cash back on debit card purchases, zero ATM fees worldwide, and 2% interest on deposits.
• Varo offers a savings account paying as much as 2.8% to customers who use its checking product.
• Other neobanks including Chime, Acorns, and Simple are also competing hard; even JPMorgan Chase has one, called Finn.
• Banks, prepaid debit cards, and brokerages are all blurring into each other, offering much the same products. Look at SoFi Money, for example, or at the new Wealthfront savings product, which promises to support bill payment soon. Expect it to have a debit card, too.

The state of play: Most mobile-first banks target millennial customers, on the grounds that they are less wedded to their existing banks and are more likely to constantly be on their phones. But a new survey from Marqeta, a fintech startup backed by Goldman Sachs and Visa, shows that Gen Xers are just as likely to have moved to such a bank, and are just as likely to want to move.

The bottom line: None of these products are particularly revolutionary, except insofar as their users tend not to hate them. If and when winners start to emerge, expect them to be acquired by the major banks, at which point Actually Pleasant Banking might start to become a mass-market phenomenon.

Go deeper: Despite rise of mobile money, millions still outside U.S. bank system