Intel Report Digital Banking - Flipbook - Page 11
Profitability and Efficiency Ratios of Select Digital-Only Banks
Return on Assets
Q2 2020
Q3 2020
Q4 2020
Return on Equity
Q1 2021
3%
Q2 2020
Q3 2020
Q4 2020
Efficiency Ratio
Q1 2021
30%
Q2 2020
Q3 2020
Q4 2020
Q1 2021
70%
60%
2%
20%
50%
40%
1%
10%
30%
20%
0
0
10%
Ally Bank
1.05%
1.51%
1.73%
2.07%
10.98%
15.44%
17.47%
20.85%
46.88%
45.19%
46.08%
41.87%
0.77%
0.68%
12.90%
11.35%
11.48%
10.63%
26.70%
28.01%
28.97%
31.41%
1.39%
1.87%
23.28%
13.09%
15.98%
25.98%
23.32%
30.33%
22.90%
16.15%
1.10%
1.38%
3.47%
9.46%
10.80%
13.73%
58.73%
60.58%
61.61%
59.96%
Charles Schwab Bank
0.91%
0.80%
Green Dot Bank
2.42%
1.25%
Industry Average
0.36%
0.97%
Source: Bank Director research using FDIC data
“Digital-only banks experience a number of challenges,” writes Barry, “including a
crowded market where they have to compete with already established big banks as
well as other challenger banks, a lack of clear product differentiation, and many of
them struggle to scale. Many also find it challenging to keep growing and achieve
profitability fast enough.”
While the financial results vary, these banks share some common advantages,
first and foremost, the ability to scale new products and services quickly using a
cloud-native architecture.
Cloud-based infrastructure, which provides for large-scale storage of data on remote,
secure servers, allows tech companies and banks to process software updates daily,
DIGITAL BANKS: PROFITS AND PURPOSE | 9