The lending moment is the new battleground for bank loyalty 

By Yaacov Martin, Co-Founder and CEO of Jifiti

For most of banking history, customers trusted banks as the only safe, regulated place to keep, grow and access their money. That assumption no longer holds, and the shift is visible in the numbers banks should be watching most closely.

A structural change is happening inside the lending industry: FinTechs now hold more than half of all unsecured personal loan balances in the U.S., while banks have fallen to just 21%. This is not a temporary dip, but rather a reflection of banks losing share in an entire product category, and of companies that, in most cases, hold no banking charter and take no deposits.

This shift has extended far beyond lending, into the realm of a bank’s core services – deposits. FinTechs, which used consumer financing as a segue, are increasingly becoming banks themselves: applying for bank charters, offering accounts and accepting deposits. Just this month, Klarna introduced a high-yield savings account into its app for its U.S. customers. With 21 FinTechs having applied for U.S. banking charters in 2025 alone, it has quickly evolved into a direct battle between banks and FinTechs for customer relationships.

This says a great deal about who is positioned to be there at the exact moment a customer needs financial services. Far more than BNPL Fair Financing, Klarna’s instalment lending product, grew 135% year-over-year and now accounts for 12% of total transaction volume, with margins running well above the company average. That growth is concentrated in instalment lending, a category that has traditionally been banks’ turf and sat at the core of bank balance sheets – not in a digital BNPL/pay-in-4 play.

Instead of simply enabling customers to purchase their next pair of sneakers, FinTechs are increasingly encroaching on banks’ bread-and-butter – responsible, longer-term loan products for bigger-ticket products and services that add value to customers’ lives, whether that takes the form of a home renovation, medical procedure or equipment for a small business.

The banks and financial institutions winning this moment (and the long-term customer relationships) have made credit decisioning for their existing lending programs instant and available exactly where the purchase decision happens, not just three menu screens deep in a separate banking app the customer has to remember to open later.

Embedding the lending decision into the merchant checkout, the dealer floor, or the service counter is thus becoming a baseline expectation instead of a differentiator.

Each additional step a customer must take to apply elsewhere, outside of their native buying journey, is an opening for a competitor already present at that moment to capture the customer relationship and build satisfaction and loyalty.

Credit decisioning before the need arises 

To strengthen existing customers’ loyalty, and defend their customer relationships against FinTechs, banks may want to take a proactive approach and serve their customers before they even get to the point of need. Banks already have all the data they need to pre-approve creditworthy customers, they simply need the means to extend this credit to these customers through their bank app, website or digital communication channels.

A customer who already has a line of credit from their trusted bank before a specific need arises won’t have to turn to Klarna or Affirm at checkout. Showing up for customers builds trust. This is not a case for banks becoming FinTechs; banks still have what the latter largely lack: balance sheet strength, underwriting depth, and regulatory standing that doesn’t evaporate when funding markets tighten.

Affirm’s own public disclosures underscore this exposure directly: the company faces significant risk from its reliance on a small number of originating bank partners like Celtic Bank, and if those partnerships ended, the company could struggle to fund its loans. The FinTechs currently winning the lending moment are, in many cases, renting the very capital advantage banks already own outright and are failing to deploy at the point of sale themselves.  As more of banking’s highest-stakes customer acquisition and satisfaction moments move into checkout flows, dealer floors, and merchant platforms, the institutions that show up there first – and proactively serve existing customers before they even encounter FinTechs – are the ones likely to own the next decade of customer trust.