Editor’s Note — This article is sponsored by Cross River Bank, Member FDIC. As with all sponsored content in Fintech Takes, this article was written, edited, and published by me, Alex Johnson. I hope you enjoy it!
Competition in financial services has always been a function of proximity.
For most of banking’s history, that proximity was physical. You left your house, walked down to the branch at the end of the block, and opened up an account.
The same was true in embedded finance. You signed up for a Kohl’s credit card in the checkout line because you were already standing there.
Customer acquisition in financial services has always favored physical proximity; the company that won the acquisition battle was the one that was closest to where you were.
This was confirmed by consumer survey data, which, for decades, consistently told us that “branch proximity” was one of the most important factors influencing where consumers chose to bank, even as the day-to-day business of banking migrated to digital channels.
Over those decades, banks acted accordingly, investing tremendously in building out their branch footprints, meticulously studying their markets block by block (not unlike McDonald’s franchising playbook of building at high-traffic intersections, stoplights, with lots for ample parking).
Today, of course, digital channels have significantly (though not completely) reduced the strategic importance of branches. Now, anyone can open a bank account or credit card (or almost any other financial product) completely online within minutes. Consumers increasingly cite mobile and digital banking features as among the most important considerations when choosing a new bank.
As digital channels have risen to prominence in financial services, market observers (including me!) have speculated that we will see a much more open market, rather than one dominated by entrenched incumbents with deep acquisition moats.
To be honest, I think we got that prediction wrong.
The shift to digital didn’t level the competitive playing field as much as we expected.
The importance of proximity didn’t disappear. It just changed shape.
From Physical Proximity to Mental Habit
In a branch-based world, proximity meant the bank that sat closest to your home or office.
In a digital world, it means the app that sits closest to your attention.
Think about your own life. Think about how you use your smartphone. There are some apps that you have on there because they play a specific, functional role. You use them when you need them, and you don’t spend any time interacting with them or thinking about them when you don’t.
Then there are the apps that are purpose-built to capture your attention. The apps that are designed to be endlessly scrolled through in all the spare moments in your day when you would otherwise be bored. The apps that you find yourself compulsively tapping on, even when you have no real reason to.
For me, the app that most frequently played this role in my life was Twitter. And my compulsion to mindlessly scroll through it became so overpowering that I had to delete it from my phone. And even without it on there, I still notice my thumb wandering to its old spot on my homescreen, searching for the part of my daily habit that is now missing.
Those apps are the new distribution layer in every sector of the economy, which means that in financial services, attention has replaced physical proximity as the most valuable resource for customer acquisition.
This shift has motivated certain financial services brands to orient their products and their business models to capture customers’ attention. And it has motivated other, non-financial services brands that already have their customers’ attention to embed financial services within their products.
Both of these trends are worth exploring because they paint two very different visions of the future of our industry.
Fintech Brands, Building for Engagement
Let’s start with financial services brands that are trying to win the battle for consumer attention, going head-to-head with the most engaging non-financial services apps and experiences on consumers’ phones.
Two examples stand out to me.
The first is Klarna.
Looking at Klarna from a financial product perspective, you might conclude that it’s a BNPL provider that is focused on shifting consumer spend from credit cards to pay-in-4 installment loans.
However, if you look at the company from a UX design and customer engagement perspective, it looks a lot less like a lender and a lot more like a social media company. Here is a partial list of the in-app features and capabilities that Klarna offers:
- TikTok-style shopping feed: A personalized, AI-powered shopping feed that looks/feels like social media, featuring scrollable content, recommendations, and creator-led content.
- Shoppable video: Embedded short-form videos (unboxings, tutorials, reviews, product drops) within the Klarna app, where you can tap items and buy on the spot.
- Creator content in-app: The shoppable video stream is populated by brands and Klarna’s creator community, so influencer content shows up directly inside the app, not only on social platforms.
- Followable & shareable wishlists: Users can create wish lists, share them, and follow lists made by influencers, brands, or Klarna’s own shopping experts to discover products collaboratively.
- Price alerts & discovery tools: Lists and the feed can trigger price-drop alerts and discovery suggestions, which keep people checking back often.
- Creator Shops & storefronts: Creators can build a “Creator Shop” (personal storefront) with products they recommend, and share that shop on their social channels.
The second example is Robinhood.
And again, from a product perspective, you might classify the company as a digital brokerage or wealth management provider. Or, if you take into account some of its newer products and planned products (such as a credit card and deposit accounts), you might consider it to be a full-service neobank.
However, the UX design and customer engagement perspective reveals a different story. Here’s a partial list of Robinhood’s in-app features and capabilities focused on attracting user attention:
- In-app market & news feed: A personalized feed showing watchlists, price moves, and curated financial news (plus Robinhood Snacks content), making the app a daily “open to see what’s happening” destination rather than just a trading ticket.
- Robinhood Social: A built-in social layer where users can follow other traders, see real trading activity and performance, and browse feed-style views of what people they follow (or top performers) are buying and selling — bringing some of the “FinTwit/Reddit” dynamic directly into the app.
- Gamification: Historically, new users could sign up and receive a “free stock” revealed via scratch-off-style cards and celebratory UX (e.g., the confetti), turning sign-up and referral flows into mini games and making referrals and trades feel like winning the lottery.
- Referral programs & rewards: Ongoing refer-a-friend mechanics where both inviter and invitee can earn free stock or cash bonuses, plus periodic asset-transfer bonus campaigns (matching a percentage of assets moved to Robinhood), which incentivize users to bring in friends and consolidate their investing activity inside the app.
This focus on user engagement makes perfect business sense. In a world in which habit has replaced physical proximity as the primary competitive differentiator when it comes to customer acquisition, you can’t really blame Klarna and Robinhood for spending so much time and money to create engaging (or even addicting) user experiences.
However, just because the business strategy is sound, it doesn’t mean it’s the right product strategy or that it will lead to the best outcomes for customers.
To be blunt, financial products often work better (i.e., produce better long-term outcomes for customers) when they’re slightly boring. After all, there’s a reason why the go-to advice with a 401K account is to set an automatic contribution and not constantly check how your portfolio is doing. And why Robinhood was forced by regulators to tone down the gamification in its app (it got rid of the in-app confetti in 2021). And why it stayed away from “copy trading” until recently deciding to inch closer to it with its Robinhood Social features.
Engagement leads to impulsiveness and volatility, which aren’t generally the words used to describe sound financial management practices.
This is why, perhaps, it will be better if financial products and services end up within the ecosystems, apps, and experiences that consumers are already using.
Engaging Brands, Building in Fintech
If a consumer already spends hours a day using a particular product or service, why shouldn’t that product or service also manage their money?
That question isn’t new. It’s just more obvious (and actionable) now.
As Jimmy Soni recounts in his wonderful book The Founders, Elon Musk’s early company X.com (which would eventually merge with Peter Thiel and Max Levchin’s Confinity to create PayPal) envisioned a single digital environment where messaging, payments, and personal finance all lived together. The premise was simple: money is digital, and digital things migrate to wherever people already are.
After leaving PayPal, Musk kept circling that idea from different angles. Now he has returned to it directly. The X.com rebrand wasn’t just a naming exercise; it was the resurrection of an old blueprint. He has talked openly about wanting Twitter to become the “everything app” he imagined 25 years ago — the place where attention, conversation, and money all share the same feed. And he’s moving in that direction: applying for state money-transmission licenses, laying groundwork for payments and cards, exploring lending, and slotting financial tools directly into the stream where people already spend their hours.
Twitter/X is the app-level example of a much bigger trend: if money follows attention, then the brands that attract attention have a structural advantage in distributing financial services. They don’t need to build a habit from scratch; they can simply monetize the attention they already own.
But that logic doesn’t stop at the platform level. If the real scarce resource in a digital economy is attention, then the real locus of power doesn’t sit solely with the platforms. It sits with the individuals who command audiences on them.
Because Twitter isn’t the product. YouTube isn’t the product.
The creators are.
A single creator with 100 million followers has something no bank has ever been able to build: a distribution network that crosses borders, demographics, and industries. They do not need a branch on every corner. Their audience shows up voluntarily, every day, with the kind of emotional allegiance that retail banks used to dream about.
MrBeast is the most obvious example. The world’s most-watched creator is working on launching a financial services offering — MrBeastFinancial — that would be built in partnership with an existing fintech company (and bank partner, presumably) to offer products to MrBeast’s audience, including student loans, insurance, and credit insights. Details on the planned products are still sparse, but the distribution advantage is obvious — MrBeast could reach more prospective customers with one YouTube upload than most banks can reach with a year’s worth of marketing spend
And he’s not alone. Across TikTok, YouTube, Twitch, Reddit, and Instagram, creators already shape consumer behavior in every category — beauty, fashion, food, fitness, travel — and increasingly, money. For a large and growing segment of young consumers, “I need help with my money” no longer means “I should talk to my bank.” It means opening TikTok and watching a creator explain how to budget, invest, refinance, optimize credit card rewards, or start a business. Expertise has started to migrate to where attention already lives.
This is the new front door of financial services.
In the branch era, banks built acquisition moats out of real estate. In the digital-attention era, the acquisition moats will belong to the companies — and increasingly the individuals — who own consumer habits. Apple, at the ecosystem layer. Twitter/X, at the app layer. MrBeast, at the creator layer. Each sits at a different altitude, but all exploit the same underlying truth: proximity never stopped mattering. It just moved.
And as embedded finance continues to expand, the most valuable distribution channels in financial services may not be banks, or even fintech companies, but the entities that know how to capture attention — whether that’s a hardware ecosystem, a social media platform, or a person with a camera and a dedicated global audience.
However, the most important question isn’t who can capture attention and acquire financial services customers. The most important question is: Who can keep them?
Retention Requires Trust
Let’s return to the branch-banking era for just a minute.
The value of branches wasn’t just about establishing physical proximity in order to facilitate customer acquisition. It was also about establishing trust in order to facilitate customer retention.
Branches have a bundled value proposition. They are both a convenient channel for acquiring and servicing customers and a physical manifestation of the trust that banks (and their regulators) want their brands to convey. That’s why bank branches are often in nice buildings with marble floors and wood-paneled walls. That’s why they continue to be designed around big vaults with impenetrable-looking doors and elaborate locks, even as physical cash and safe-deposit boxes become more scarce. That’s why banks try to hire (and retain) tellers and loan officers who are long-time, trusted members of their communities. That’s why the FDIC has very specific requirements for banks with FDIC insurance regarding physical signage.
They were all signs meant to convey trust, to tell customers, “your money is safe here, and the advice we give you is sound.”
And just as the digitization of financial services didn’t level the playing field for customer acquisition as much as we might have thought it would (the brands with the most attention have a natural advantage), it didn’t level the playing field for customer retention either.
Retention requires trust.
But how do brands signal trustworthiness in a digital financial services ecosystem? Especially for non-financial services brands (companies or individual creators) looking to embed financial products? How do they avoid damaging the trust and affinity they’ve already built with their customers when they are stepping into an industry they know nothing about?
MrBeast damaged his brand when he launched a hamburger! And that’s many orders of magnitude easier and less risky than launching a financial product.
However, the aftermath of MrBeast’s failure points us toward an answer: pick the right partners.
If you have attention and you want to embed financial services within your product in a way that strengthens your customers’ trust and affinity with your brand, the most important decision you are going to make — the one that sits upstream of every other decision — is which bank partner to work with.
Finding the right bank partner is about more than picking the one with the lowest pricing or the biggest balance sheet or the most well-known brand. It’s about alignment.
You want a partner who treats regulation as a design problem to solve, who understands the rules deeply enough to navigate them creatively, safely, and responsibly so that bold ideas can move forward. You want a partner that has the experience (and scar tissue) to see around corners and avoid problems, because the risks that kill you in embedded finance are the ones you don’t know you don’t know. And you want a partner that has built (not outsourced!) the technology to help you move quickly and iteratively, rather than allowing the scope of your ambitions to be defined by the capabilities of a core banking system that was designed in 1985.
If every brand with a large enough and engaged enough audience can offer embedded financial products to those audiences (and I do think that’s where we’re headed), we’re looking at a world with significantly more financial brands for consumers to choose from. The winners in that environment will be the ones that find the right balance between optimizing for attention and optimizing for trust.
Finding that balance is a lot easier when you pick the right bank partner to help you bring your embedded finance vision to life.
