- Key insight: Mercury's push into consumer banking is part of a trend in which fintechs are blurring the lines between business-to-business companies and business-to-consumer ventures.
- What's at stake: The move is the latest example of digitally focused fintechs inching onto turf traditionally held by banks.
- Expert quote: "Consumers want a great digital experience across all of their financial services needs. Being able to see and seamlessly transact across one's banking, traditional investments and digital assets together under one application is the direction we are heading," said Jonathan Langlois, a principal of KPMG US's financial services strategy advisory practice.
Mercury, a fintech that started out by providing financial services to startups and other businesses, is making a big push into the consumer marketplace.
On Thursday the company opened applications for its Mercury Personal offering to all U.S. residents 18 years and over. For the previous 20 months, the product had been available only to individuals who joined a waitlist.
"Consumer banking carries a different set of operational and regulatory expectations than business banking, so we spent the past year making sure the product could scale responsibly," Alexey Likuev, Mercury's head of personal banking, told American Banker.
Mercury is not a bank, but it worked with banking partners Choice Financial Group and Column N.A. to ensure that its consumer product met regulatory requirements. At the same time, Mercury worked on scaling its own compliance and support capabilities "to serve a broader audience," Likuev said. Its original bank partner was Evolve Bank & Trust; Mercury
Today, Mercury says it provides financial services for over 200,000 companies and individuals, up from more than 100,000 businesses — many of which were startups — in April 2024. About half of Mercury Personal customers also use Mercury for their businesses, according to Likuev. The other half, he said, "are entirely new to Mercury."
"We're building Mercury Personal for people who want premium tools to manage their money, including founders and people who value precision, transparency and control," Likuev said.
On average, customers hold balances above $80,000, according to the company.
Mercury charges a $240 annual subscription fee for its personal banking product, which includes a savings account that allows customers to earn a 3.5% annual percentage yield.
The value proposition also includes no-fee wire transfers, both domestically and internationally; investment opportunities; joint accounts for up to four people; and deposit insurance of up to $5 million through Mercury's partner banks and their sweep networks.
Blurring the lines between fintech and banking
Mercury's consumer push is reflective of a trend of more fintechs seeking to move into retail banking. For example, the crypto exchanges Coinbase and Wise, which historically focused on cross-border payments, are looking to open banks.
Indranil Bandyopadhyay, a principal analyst at Forrester, believes this trend confirms that the "pure" business-to-business or business-to-consumer fintech model is blurring.
"The most valuable long-term position is to own the financial data and relationship at the center of a customer's life, whether that's their business life or their personal life," he said. "The winners of the next decade won't just store money; they will own the networks where money is earned, spent, and saved, effectively becoming closed-loop financial systems."
Jonathan Langlois, a principal of KPMG US's financial services strategy advisory practice, believes the trend will continue because the banking experience is still "very fragmented."
"Consumers want a great digital experience across all of their financial services needs. Being able to see and seamlessly transact across one's banking, traditional investments and digital assets together under one application is the direction we are heading," he said.
Fintechs that focus on large customer segments have a higher likelihood of success, according to Langlois.
Fintechs generally move at a much faster pace than traditional banks because of their modern tech infrastructure, "disruptor mindset and startup mentality," he added. They also tend to be hyper-focused on specific use cases.
"And the pace of innovation is much easier in a smaller organization versus a large bank with layers of governance," Langlois said.
That's not to say that traditional banks lack advantages. They still lead the way in terms of breadth of products, human customer service, branches, brand awareness and consumer trust, Langlois said. Banks have also benefited from their acquisitions of fintechs.
"Banks continue to look at ways to level the playing field with fintechs through acquisitions, regulatory lobbying and the threat of charging for data if the open banking framework is implemented," Langlois said. "Banks are likely to face greater competition from fintechs moving forward."
For its part, Mercury is trying to differentiate itself from the big banks by offering features such as customizable permissions and access. Mercury customers can offer "view-only" access to their CPAs, for example, and they can create debit cards that auto-reload every week for their nannies.
Mercury argues that its subscription model replaces "the hidden-fee approach" of legacy banks.
"Instead of nickel-and-diming customers for domestic wires, minimums, or basic functionality," Likuev said, "we offer a single, predictable fee for a premium banking experience that … helps people manage their money."
Mercury, he believes, is filling a gap.
"Legacy banks rely on outdated tech, hidden fees and high-touch private wealth models, while many fintechs focus on serving the underbanked," Likuev said. "That leaves a growing segment of customers who want premium, software-first tools that give them real control over their money, and that's the gap Mercury is stepping in to fill."
In March, San Francisco-based Mercury
