The news: After essentially halting the Consumer Financial Protection Bureau’s (CFPB’s) operations, Elon Musk’s Department of Government Efficiency (DOGE) fired dozens of “probationary” CFPB employees and contractors via email, per Wired.

As we covered previously, although financial institutions (FIs) may be celebrating the rollbacks in certain regulations, the CFPB remains the primary regulator for nonbank lenders. Without the regulator, lines will likely blur between banks and their digital competitors.

What’s next: According to PYMNTS, that’s already happening. And in the new regulatory landscape, it may be easier for fintechs to get one of banks’ biggest differentiators—a banking license.

The fintechs that have made the transition into chartered banks have—for the most part—benefited from the decision.

• Since acquiring a banking license in 2022, SoFi has amassed $26 billion in deposits, with 90% of SoFi Money deposits coming from direct deposits.
• LendingClub’s acquisition of Radius Bancorp has driven a 24% increase in deposits, with new savings products attracting $1.2 billion since August 2024.
• Varo became the first all-digital nationally chartered bank (since 2020) with 7 million users.

Our take: Competition between traditional FIs and fintechs will intensify if this trend continues, further pressuring FIs to differentiate themselves. This will require FIs to know which features and products their customers want most—and beat their competitors to developing them.

To understand which mobile features would set FIs apart from the competition, read our report “US Mobile Banking Emerging Features Benchmark 2024” next.