One such market is payments, and specifically, peer-to-peer payments.

In 2009, two university students created Venmo, a person-to-person (P2P) payments solution, because they found settling a small debt to each other was more troublesome than it seemed it should have been. Since then, the Venmo app has taken off and is so popular with millennials that in the US the word “Venmo” is a verb. Splitting a bill and need your friend to settle her portion? “Venmo me.”

In 2012, payments company Braintree acquired Venmo for approximately $26m, and a year later, Venmo found a home at PayPal when the digital payments giant purchased Braintree in an $800m deal.

Today, Venmo processes tens of billions of dollars worth of payments per year and is still growing like a weed. In fact, in the second quarter of the year, it processed $8bn in payments, a more than 100% increase year-over-year.

As Econsultancy contributor Charles Wade observed, “Companies like Venmo…are outflanking traditional players by combining genuinely useful capabilities, like splitting payments across a group, with zeitgeist features such as transaction history in a social media-style feed, replete with comments.”

For obvious reasons, established players can no longer ignore upstarts like Venmo and thus, they’ve been busy developing their own alternatives.

The establishment’s “Venmo-killer” is called Zelle and it’s finally here. More than 30 banks, including Bank of America, Citi, JPMorgan Chase and Wells Fargo, as well as a number of large credit unions, are on board with Zelle.

So how does it stack up?

Zelle serves largely the same purpose as Venmo but it adds a few twists. These include:

  • Many of the banks that are participating in the Zelle network have integrated Zelle into their own banking apps. While a standalone app is also available, having its functionality accessible through banks’ existing apps could theoretically help drive adoption and usage.
  • Payments sent between Zelle users “typically occur in minutes” as opposed to one business day or more with Venmo.
  • Sending and receiving payments in Zelle is free. The same is true with Venmo except in cases where the source of funds is a credit card.
  • When sending payments through a banking app that has integrated Zelle, users can select the source of funds. For example, it’s possible to send a payment with a checking or savings account. Venmo doesn’t offer this functionality.
  • Adding a debit card to Zelle’s standalone app is easier than with Venmo as a routing number isn’t required.
  • Unlike Venmo, Zelle isn’t as focused on social features.

The big question: will any of Zelle’s potential advantages over Venmo help it achieve success now that Venmo has already reached verb-level popularity?

It’s hard to say. Despite the fact that Zelle has some advantages over Venmo thanks to its banking backers, a lot will depend on how well it’s marketed. Even if Zelle takes an aggressive stance and decides to highlight Venmo’s flaws, the millennial userbase of Venmo might not care. As Econsultancy research analyst Arliss Coates noted, “even without millennial antipathy to the banking sector, the 18-40 year old market is notoriously tough to win over.”

With this in mind, it’s interesting that Zelle isn’t prioritizing winning over Venmo’s core userbase. “When we talk about Zelle, it’s about a target market that ranges from 18 to 54,” Jeremiah Glodoveza, VP of communications at Early Warning, the company that operates Zelle, explained.

According to Glodoveza, that’s why certain features, like social sharing, aren’t a part of Zelle. “What we’re really optimizing is for an ubiquitous experience,” he stated.

Time will tell whether this strategy can work and the outcome will reveal a lot about entrenched financial institutions’ ability to catch up to the upstarts that have been disrupting them.

For more on this topic, check out these Econsultancy resources: