In fact, the idea that the solution to our financial woes can be found in a more convenient, higher-tech, friendlier-named digital bank feels a little like the last story we heard from the tech industry: That the very idea of work could be disrupted by a bunch of apps, too.

The same business logic—that you’re trapped in a sad, hellish existence dictated by megacorporations, and tech can free you like Neo from the Matrix—underlies the entire gig economy. It’s the basis for another tech veneer, this one layered over people’s inability to find meaningful work for reasonable pay. Uber got into the financial services game recently, with Uber Money. The headline feature? Real-time earnings for drivers and delivery people, so they can collect immediately, instead of weekly.

In fact, we can use the evolution of the gig economy as a case study for how the latest wave of banking disruption might play out.

There was a lot that was appealing about the gig economy at first. Those Uber “side hustle” commercials were super cool back in 2016, when driving for Uber or Lyft or Postmates, or shopping for TaskRabbit or letting out a room on Airbnb to cover your hiked-up rent, actually seemed like an opportunity rather than a necessity. Remember when this was about making “extra” money, instead of just barely enough?

It was only scale, and the hard realities of American economics, that made these things look a little less consumer-friendly a few years later. As Uber and Lyft grew, driver pay went down. Word got out that unicorn-like businesses could be built by replacing paid employees with a massive network of independent contractors. The model spread. Enter Lugg, Instacart, DoorDash, GrubHub, Prime Now, and Homejoy.

This phalanx of apps comprises an army of independent contractors who hope for enough tips to make their labor worthwhile. As their finances have cracked under the strain of small checks, no benefits, and a near-total lack of retirement savings, I guess it was only a matter of time before a fresh set of apps—the neo-banks—were deployed amid the chaos.

I’d like to think the mission-driven companies flooding into the US market for financial services will be better for consumers. In the short term, that seems plausible. Cool features, fewer fees, and a helpful person on the phone or online chat could make us happy. Let’s not forget, many people really hate big banks and would rather take their business elsewhere.

But there are two problems with this potential disruption.

One, it might not end up being so consumer-friendly in the long run. Uber and Lyft ended up paying drivers less as their revenue pressure grew, and they’re raising prices for consumers. Many riders will tell you the quality of the driving, the cars, and the experience has declined over time, which is both inevitable with growth and not surprising given the shrinking pay and incentives.


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That will almost certainly also be the case with these neo-banks. Banks won’t lie down and let the disruption happen—they’ll almost certainly buy some of these upstarts and reabsorb reluctant customers. Big Tech incumbents are already honing in on the space. Apple’s (issue-laden) credit card, Amazon’s small business loans and unknown future ambitions, Google’s forthcoming consumer checking accounts, and Facebook’s payment wallets could all eat into the market for new companies.

Whether it’s due to competition from banks, each other, or bigger tech companies, neo-bank startups will inevitably go out of business, leaving consumers stranded. That’s pretty disruptive when you’re talking about your checking account. And at some point, the neo-banks will have to make more money, which means their offerings will get less generous over time.

A second problem is more serious. Ultimately, no amount of friendly design, accessible features, and overdraft protections will solve the underlying problems that made these services necessary in the first place. No neo-bank can erase the student loan debt or the 40-year stagnation in wages or the unexpected medical expenses or the crippling reality of America’s existential brokeness. The neo-banks have promised that they’ll ease your pain, but that’s just morphine for the real condition. When it comes to the actual sickness, you’re still on your own.

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