Letter from the Editor: Digital banks have different answers to what banking should become next - Tearsheet

Digital banks began by digitizing banking to address structural flaws in traditional banking, including slowness, fragmentation, and inaccessibility. Once access and friction reduction were largely solved, the focus shifted to what banking should become next. One logic keeps the original promise by prioritizing access, lower fees, and stability for underserved users, emphasizing clarity and control so money is easier to hold, understand, and manage with fewer surprises. Another logic, especially in Europe, builds infrastructure-led banking by layering services around the account, expanding into adjacent products, and treating the account as a platform. Revolut combines elements by compressing financial behavior into a continuous system spanning FX, trading, crypto, payments, savings, and wealth.

"Digital banks are diverging from a shared starting point rooted in responding to the structural flaws of traditional banking, which was seen as too slow, fragmented, and inaccessible. The answer was digitization: move banking into the phone, remove friction, improve UX, and expand access."

"One group - think Chime, Cash App, Varo Bank, and Current - has stayed closest to the original promise of access, lower fees, and financial stability for underserved users. The underlying product philosophy remains anchored in clarity and control, where money is designed to feel easier to hold, easier to understand, and easier to get right. The goal is not expansion, but reduction: less friction, fewer surprises, fewer ways to get it wrong."

"Another group, particularly across Europe - think N26, Monzo, Starling Bank, and bunq - has moved closer to infrastructure-led banking. These players are layering more services around the account, expanding into adjacent financial products, and positioning the account itself as a platform rather than a standalone product."

"Then there is Revolut, which doesn't neatly fit into either category. It is compressing financial behavior itself into a continuous system where FX, trading, crypto, payments, savings, and wealth are expressions of the same underlying intent. The real divergence: What "simplicity" actually means"

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