T-mobile just announced that they plan to provide mobile banking services to their customer base. These services include a pre-paid debit card, a mobile banking app, and a basic checking account.
Clearly T-mobile is continuing to offer value to their customer base that has signed up for a phone using a pre-paid contract…. and it’s working. T-mobile is quickly winning customers in the coveted 18 – 35 target market…the segment that is most likely to engage with mobile banking.
T-mobile is partnering with The Bancorp Bank to provide this customer value. Sprint was the first carrier to partner with Boost Mobile to provide similar banking features to its customers. These strategic partnerships provide a great deal of value to both partners in the mobile and banking verticals. Many T-mobile and Sprint customers have pre-paid contracts so it’s not a far leap to understand this segment would also see value in a pre-paid debit card and low fee banking products. The banks providing these services gain access to a mobile savvy customer base that is not being well served by the Top 100 banks.
These strategic partnerships should raise the neck hairs of executives at the remaining mobile carriers and at the Top 100 banks. Yes, Verizon and AT&T are big guerillas. However, similar to bank sentiment, mobile carrier sentiment is low too. Consumers are tired of paying high fees for mobile service. However, by providing additional value to a high life time value audience, these carriers can attract customers away from the larger carriers…even if it’s a slow and steady rate. Remember the tale of the tortoise and the hare? AT&T and Verizon should consider opportunities that may be available with yet “un-wed” mobile banking providers like GoBank, Moven or Simple. I’m wonder if the pay as you go mobile provider, Ting, is talking with any of these similarly minded banking providers? There could be an interesting partnership there.
From the banking perspective, executives are aware that it’s all about mobile. Contrary to recent articles touting that top banks are aware of the importance of mobile, it’s well understood that most banking technology innovation will occur OUTSIDE of the banking industry. I’ve heard this big bank mobile focus described as a mobile arms race. However, I think banks may need to buy their “arms” from outside the banking industry providers, to continue the metaphor.
Over time, maybe within just 5 years, a young and frustrated segment of customers will be evaluating and switching to banking providers who meet their needs in the most cost effective way through a channel that is most convenient. It’s no secret that this channel is mobile.
Banking executives must quickly evaluate how they can meet the needs of customers beyond banking and providing special offers that can be found already in a Penny Saver. Because of the negative sentiment towards banks, financial institutions may consider being an unbranded, silent partner where they provide the banking back end and rely on a partner to provide the branded consumer facing front end. However, could a big financial institution that is used to being the “alpha male” in a relationship be open to playing a more balanced role with an innovative partner? Over time, the bank’s future as a leading financial institution may depend on this as the coveted 18-30 population ages and mobile banking becomes more ubiquitous. *
* The use of the word “ubiquitous” is brought to you by Starbucks, a brand with retail locations everywhere. 🙂
Eric Dunstan 
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