It’s not just challenger banks popping up to vie for consumer and business bank accounts. With consumer demand and new empowering technology, it feels like everyone is getting into financial services — from grocery chains to telecom companies. After piloting for half a year, last month, T-Mobile announced a new no-fee, interest-earning, mobile first checking account. Behind that white label offering is BankMobile, a division of Customers Bank.
BankMobile’s co-founder, president and chief strategy officer Luvleen Sidhu joins me on the podcast today to talk about why everyone wants to get into banking. We talk about BankMobile’s own business, its partnerships with colleges, and how the digital bank services students through various lifecycles.
BankMobile started about 4.5 years ago as a digital, mobile-first bank. We started with the philosophy that the macro consumer trends were shifting and banks were slow to adapt to these changes. Consumers interact with their banks 20-30 times a month on their mobile device but only walk into a branch one time a year. A third of Americans live paycheck to paycheck. These same struggling Americans were being charged $34 billion in overdraft fees. From a channel and user experience perspective, consumer needs and behaviors weren’t being met.
On the business front, bank branches on average are opening up 52 net checking accounts per branch annually. We thought we could move from a branch-based acquisition model to a model where we could generate higher volume with lower costs using technology. Now, we’re among the largest and fastest growing digital banks in the US with about 2 million accounts.
Using colleges to go to market
We always felt it was important to have an acquisition strategy to be able to reach customers to share our product. We’ve shifted to a B2B2C strategy where we can partner with companies, institutions, membership-driven organizations that have a captive audience that they want to build stickier relations with.
We started with the higher education market. Today we have relationships with over 800 campuses. We solve a pain point for the school in making disbursement payments to students. Students can use ACH to receive these disbursement payments to an existing bank account or open a BankMobile account.
Everyone wants to offer financial services
I think it’s about how to continue to create engaged, sticky, loyal relationships with your customers. The more you can address their pain points, the more of an emotional connection you’ll have.
You see it with Apple and Marcus — there’s definitely a transactional relationship with customers they can build upon. But it also provides a better way for people to get rewarded and get financial management through this credit card. Financial services is just one more outlet for customer-centric companies that want to address their customers’ needs and create more touch points and connections.
Prioritizing banking as a service
We want to continue building our banking as a service platform. We’re so proud of our T-Mobile partnership and it’s very aligned with us. We couldn’t have picked a better partner to launch this business with. We’re looking at other white label partners who buy into this mission and vision of serving their customers in a more consumer centric way with financial services. My goal is to create another white label relationship by the end of 2019.