As payments company Block’s peer-to-peer tool Cash App seeks to entice its users to use the mobile app for banking services, it may run into one surprising hurdle: many consumers still want to go into a physical bank branch.
About 40% of consumers aged 18 to 34 surveyed said they do use, or would use, Cash App as their primary bank, making them the most likely age group to do so, according to a report last week by investment firm TD Cowen. By contrast, only about 30% of consumers aged 35 to 54 and about 10% of consumers aged 55 years and older expressed the same openness to Cash App.
The report summarized findings of a bi-monthly survey of 2,500 U.S. consumers conducted by TD Cowen in April, and included data from a previous survey conducted in February. The survey was designed to assess consumer awareness, behavior, preference and sentiment across payment methods.
Traditional banks, such as Chase and Wells Fargo, were the most popular primary banking option for consumers in the 18 to 34 age group, followed by fintech apps such as Cash App and Revolut, then purely digital neobanks such as Chime and SoFi, the report said. And when asked why they were reluctant to switch to a neobank or fintech, about 45% of consumers in that age range said they were reluctant to use a non-traditional bank because they wanted access to a physical branch.
From Block’s perspective, selling banking services to Cash App users is a “top strategic priority,” CFO Amrita Ahuja said during a recent earnings call in May.
Still, the TD Cowen report noted that consumers were increasingly using Cash App for services beyond P2P payments, including for banking services, direct deposit and shopping.
“Cash App punches above its weight” with consumers in the 18- to 24-year-old range, the report said. The app’s users tend to be younger and lower-income, but it’s high-earning younger users are open to doing their banking with Cash App, the report said.
Cash App competitor PayPal proved the most popular payment service, with about 70% of all consumers surveyed saying they had used the service, according to the report. PayPal led its own app, Venmo, along with Cash App in all other age groups older than 24 years old, according to the report. Venmo was slightly ahead of Cash App when it came to lifetime users, the report said.
Consumer preferences may not be the only challenge Cash App has to overcome as it seeks to expand into banking. Block’s compliance program, including at Cash App, is under investigation from the Department of Justice. The company is also facing whistleblower complaints of alleged fraudulent activity on Cash App that were filed with other federal agencies.
Additionally, the Consumer Financial Protection Bureau said it may take “legal action” related to customer service concerns connected to Cash App, according to a company disclosure in February.
