The data: Respondents to an American Banker survey of banks with more than $100 billion in assets ranked nonbank payments companies (58%), nonbank mortgage firms (41%), and nonbank stablecoin issuers (32%) the top business threats for the year ahead.

Zoom out: Nonbank consumer payments firms fall into three overlapping categories: peer-to-peer (P2P) apps; digital wallets; and adjacent consumer payments, like buy now, pay later:

• PayPal and Block offer P2P payments (via PayPal and Venmo, and Cash App, respectively) and merchant services. Each offers a checking account and issues a debit card in partnership with a bank; PayPal and Venmo also issue credit cards.
• Digital wallets fall into two main camps, each handling payments differently. Organizer wallets like PayPal link to bank accounts and hold payment cards. Payment wallets like Apple Pay and Google Pay typically initiate transactions from banks’ payment cards.
• Nonbank payment-adjacent firms have emerged as a direct threat to banks: Affirm offers a savings account and debit card and recently applied for a bank charter. Afterpay, owned by Block, will soon be integrated with Cash App.

As the neobank market has consolidated into a few major players, these apps have become de facto nonbank payment apps. Chime and Robinhood offer P2P features. Robinhood’s P2P network is limited to its app users, but Chime enables P2P payments outside of its ecosystem.

Implications for banks: Nonbank payment firms are disintermediating and duplicating banking products while targeting a younger customer base with digitally native experiences built in-house. National banks should be concerned about deposit flight to payment apps as well as their increasingly tenuous ownership of the customer.

Banks do not face primary-account switching overnight but may slowly bleed customers and struggle to attract first-time account owners. The solutions are to embrace disintermediation—by becoming the linked, primary deposit account for payment apps and the card used by wallets—or scale direct competition with features like Paze.