Digital finance companies continue to reshape the financial landscape by providing services traditionally offered by banks. Platforms such as Block, Affirm, SoFi, and PayPal (NASDAQ:PYPL) are diversifying their offerings, incorporating features like debit cards, buy now, pay later (BNPL) services, and direct deposit functionalities. These companies aim to create an all-in-one financial ecosystem, allowing users to perform multiple banking tasks through a single app. Their latest earnings reports indicate a growing reliance on these digital financial tools and services.
Earlier reports on the expansion of FinTech services highlighted their initial focus on payments and lending. Over time, these companies have shifted towards comprehensive financial solutions, integrating banking-like services such as paycheck deposits, savings options, and rewards programs. While digital wallets and BNPL offerings were once their primary focus, current trends suggest a deeper investment in financial products that mirror traditional banking. The ongoing increase in deposit volumes and card usage underscores this evolution.
How Is Block Expanding Its Cash App Services?
Block has reported a significant increase in Cash App usage, with its Cash App Card reaching 25 million active users as of December. The company stated that a notable portion of young adults in the U.S. now rely on this card for transactions. Additionally, Block observed a 25% rise in paycheck deposit activity through Cash App, reaching 2.5 million users. This indicates a growing acceptance of Cash App as a banking alternative.
“We rounded out key features for our paycheck deposit offering, giving eligible customers access to features such as high-yield savings, free in-network ATM withdrawals, paycheck allocation to stocks and bitcoin, overdraft coverage and free tax filing,” Block stated in its shareholder letter.
What Growth Has Affirm Seen in Its Card Adoption?
Affirm has reported strong growth in its Affirm Card usage, with gross merchandise value (GMV) rising 113% to $845 million. The number of active cardholders also saw an increase, reaching approximately 1.7 million. A recent partnership with FIS allows financial institutions to incorporate Affirm’s services into their platforms, broadening its accessibility beyond its own ecosystem.
SoFi reported an increase in its customer base to over 10 million members, a 34% year-over-year growth. The firm’s deposit balance reached $26 billion, driven largely by direct deposit activity. Additionally, SoFi’s lending business has expanded, with loan originations surpassing $23 billion in 2024. The company is also preparing to introduce a co-branded debit card in the coming months.
PayPal has strengthened its financial offerings by integrating its debit card with Apple (NASDAQ:AAPL) Wallet, facilitating in-person payments. The company also expanded its rewards program, allowing users to earn cashback on specific spending categories. According to PayPal’s earnings report, Venmo debit card usage grew by over 20%, while the company gained 1.5 million new PayPal debit card users in the last quarter.
“We added more than 1.5 million first-time PayPal debit card users in the fourth quarter, and debit card TPV was up nearly 100% in Q4,” said PayPal CEO Alex Chriss.
The increasing adoption of FinTech banking alternatives indicates a shift in consumer preferences. As these platforms extend their financial services, they pose a growing challenge to traditional banks. While digital wallets and BNPL services initially attracted users, the current focus is on offering banking-like products, including paycheck deposits and savings features. The competition between established financial institutions and FinTech firms is expected to intensify as digital platforms continue expanding their capabilities.
