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I’ve been watching the fintech space for a while now, and I’ve got to tell you something most people don’t want to hear.
Most of these companies trying to replace your bank aren’t going to make it.
Companies like SoFi (SOFI) offer financial literacy tools, subscription tracking and features banks are behind on. The user experience is miles better, but better user experience doesn’t fix the underlying issue.
The Fatal Flaw in the Fintech Model
It’s tough trying to be the bank when you’re not a bank — the economics are stacked against them.
You have to pay a lot of money to get a customer, and customer acquisition costs are brutal. Once you get them, it’s hard to generate real fees in that model.
That’s where the comparison becomes obvious. Compare that to Robinhood (HOOD).
Robinhood has been one of the biggest fintech winners lately, with the stock nearly tripling over the last 14 months. They proved that if you can move a user from “gambling on Dogecoin” to depositing their entire paycheck, the customer acquisition cost problem starts to disappear.
When you’re Robinhood, you’re not charging traditional trading commissions on most trades. Instead, the company generates revenue from payment for order flow, the bid-ask spread on crypto transactions and net interest income on customer cash balances.
It’s a model built to generate money every time users engage or keep cash on the platform. Most consumer-focused fintech companies don’t have that. They’re offering a better checking account, not a revenue engine.
I invested in Chime (CHYM) myself because it looked like a failed IPO and I wanted to give it a shot. I watched the stock action closely, and it doesn’t look like it’s going to work.
The model is heavily reliant on interchange fees — the small cut they get when you swipe your card. In a world of high interest rates and AI-driven banking, “just a better checking account” isn’t enough to sustain a premium valuation.
Why the Crowded Field Makes It Worse
Here’s what makes this even tougher — fintech is a very crowded field.
The big story in 2026 is agentic AI. The winners are using AI to handle 90% of customer service and personalized financial planning, which has slashed their operating costs to levels a traditional bank can’t touch.
Every startup saw the same weakness in traditional banking and rushed in with a better app and cleaner interface. But solving user pain points doesn’t automatically translate into sustainable economics.
The space is packed, customers jump around easily and the advantages don’t last long. Many of these companies are burning cash just to stay in the game.
Some aren’t going to make it, no matter how polished the app looks.
Trade well,
Jack Carter
Jack Carter Trading
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