Digiday, October 18, 2018: T-Mobile is working with a digital bank to offer financial services
T-Mobile and digital-only bank BankMobile are joining forces on a financial services offering for the wireless provider’s customers.
Customers Bank, BankMobile’s parent company, wrote in an SEC filing this week that it’s been working with T-Mobile since 2016 on a new product and technology partnership. The filing doesn’t spell out the type of financial product, but it offers two key details: digital account opening and “substantial subscription model benefits.”
With mobile banking adoption rates in the U.S. increasing (around half of banked Americans accessed their account through a smartphone last year, according to the Federal Reserve), analysts say a tie-up will let the digital banking provider access millions more customers and benefit from the geographic spread of T-Mobile’s store network and customer base.
While BankMobile currently has 1.8 million account holders, T-Mobile has nearly 73 million customers and more than 20,000 physical locations. Adding bank accounts could let the telecom provider learn more about its customers’ habits, letting it “own” the relationship and personalize it more.
This isn’t the first time U.S. telecom companies have played in financial services. In 2010, AT&T, Verizon and T-Mobile partnered on a mobile payments system called Softcard, which was originally called Isis, which rolled out in 2013 with financial services partners that included Mastercard, Visa and American Express.
While the provision of financial services may seem somewhat far off in a U.S. context, it’s relatively common in markets with bigger unbanked populations. BankMobile, which was launched in 2015, has traditionally focused on the student market; it has relationships with 726 university campuses across the U.S. It claims to have a lower customer acquisition cost than traditional banks at $19, compared to hundreds of dollars for traditional banks. For T-Mobile, despite the advantages from a customer relationship and data standpoint, wading too deep in financial services is a risk. Should T-Mobile take on financial services, even with a partner, it could prompt additional government oversight. Any arrangement to share bank account data with the wireless provider would also likely be subject to a close eye from regulators.
It’s a much bigger win for BankMobile, which can grow account numbers more quickly with the scale of the T-Mobile customer base, said Maule.
“It gives them a national distribution channel with a large partner,” he said. “What will be interesting is how the revenue share model for these customers works with T-Mobile and what the term of the engagement is.
