Mobile services are unleashing new banking frontiers with Gigs’ Hermann Frank

Earlier this year, we first heard news from Revolut and then Nubank launching mobile services. At the time, it just seemed like a story about cross marketing and selling.  Both neobanks have large audiences, and selling a mobile plan would likely make some ancillary money. 

A few years ago, things were happening in the reverse direction – it seemed the big US telephony companies were all interested in getting into banking. A few offerings were launched but not much really came of it. 

But it feels like something is different now. Both Revolut and Nubank partnered with Gigs, which has been referred to as the Stripe of mobile. As co-founder and CEO Hermann Frank said in TechCrunch, these firms are working to  “create an ecosystem where banking acts as a hub for multiple value-added services.”

“Bundling mobile plans represents a powerful lever for neobanks to turn irregular users into monthly paying subscribers, encourage upgrades to premium features, and create an ecosystem where banking acts as a hub for multiple value-added services,” he said.

Hermann joins us on the Tearsheet Podcast. We explore how traditional phone plans, once mere commodities, are transforming into extensible platforms for innovation. Hermann shares insights on how programmable connectivity enables neobanks to create sticky, world-class digital experiences that surpass the limitations of conventional telecom services.

The big ideas

1. Gigs enables any business to launch their own mobile service quickly by making phone plans embeddable and programmable. “So gigs basically offers the infrastructure to do just that.”
2. Building a mobile service without Gigs’ platform would take around 18 months of heavy lifting, while Gigs can do it in days. “That’s exactly that’s one layer of the business is exactly this, right. And the aggregation business previously existed in telecom as well. But it just didn’t give you anything else.”
3. Nubank partnered with Gigs to offer travel SIMs to customers through a simple one-tap process in the app. “And then you can instal inside of the app or one tab, it can steal the SIM card, don’t need to leave no need to scan any QR codes. And your online it’s really it’s really quite quite magical.”
4. Banks can now integrate services like phone plans, travel, insurance into their apps to create bundled offers tailored to customers’ lifestyles. “So basically, you can automate the whole process you can bundle travel, right, as we’re seeing already happening.”
5. Gigs aims to simplify connectivity for SMBs and enterprises across multiple countries through its global platform. “And I think that it will truly show the power of one global, coherent platform that’s kind of abstract, everything away and as fully embeddable.”

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Read the transcript (for TS Pro subscribers)

What is Gigs and How Does it Work?

Gigs is a platform that enables any business to launch their own mobile service in a matter of days. So what we’re basically making possible is that you can make phone plans embeddable and programmable for whatever use case you might have as a platform.

The Technology Behind Gigs

I think that you described already quite well, what the traditional problem was like everyone who attempted to become an MD, you know, in a traditional sense, had to go through massive, massively heavy lift to launch the service, most MVNOs fail because they were never able to recoup the capex and then the ongoing operational expenses that you need to put in if you run it in a more traditional way, have a lot of manual overhead intervention, customer support. And there was no unified programmable infrastructure between the networks and you know, whatever company wants to launch a service until gigs, and then we took ourselves like about three years to build the infrastructure to make it happen.

Parallels with Stripe in the Payment Industry

Yeah, absolutely. So just like with the payments industry, before stripe, Adyen and the likes came along, it was an incredibly heavy lift for companies to become a platform that can accept payments or offer banking services, it needed to cut through a lot of regulatory red tape, you need to partner with banks, you need to go to Visa, MasterCard, Amex, right like have deals, well, those down you need to build the technical infrastructure to facilitate all that.

Pricing and Commercial Model

We have wholesale agreements with our operators that we work with. And typically the calculation is as follows: we are always larger than our largest customer and wholesale and telecom is very much volume driven.

Handling Capital Commitments

That’s kind of our core business, right? Like we were growing quite quickly. So we kind of are able to estimate across our portfolio, kind of what our run rate will be in terms of usage and growth. And it makes it simpler to buy for a growing number of large platforms and kind of abstract away a risk when it’s across a portfolio versus individual endeavor that you would have.

Partnership with Nubank

Yeah, so very excited about this partnership, obviously, I think Nubank is kind of a stellar example of what it means to operate a neobank at large scale, extreme efficiency.

Potential Use Cases in Fintech and Finance

I think that what we’re seeing generally, across the industry with a multitude of neobanks and also more traditional banks, getting into the space is the notion that neobanks in particular, have been able to accumulate this vast user base of mostly millennials, Gen Z, that are used to life working on you know, one or two taps.

Interest from Traditional Banks and Other Industries

We’re definitely being approached by more traditional institutions, some kind of household names as well. You know, we’re very happy and excited to work with them as well, I would assume neobanks will be faster. But the traditional banks have no space in this orchard in play, I think it just shows how much of a nerve it’s hitting in the entire industry.

Expansion into Other Industries

We started out with devices, so we were quite market leading when it comes to everything from smartwatches to feature phones and increasingly also smartphones. I think companies like Light Phone and Explorer would be two internationally quite well known examples. And one space we’re particularly excited about and we’re looking at next is the whole HR people tech space. So wherever there’s like an employer-enabled phone plan, or the need for one automating that. I think there’s a big gap on the market as it’s incredibly complex to manage connectivity for SMBs. For international enterprises, we’re currently setting up something for a partner in over 20 markets, right? And like aggregating all of their connectivity needs, across all the markets, they have offices or employees or business in. And I think that it will truly show the power of one global, coherent platform that’s kind of abstracting everything away and is fully embeddable. And it’s a massive opportunity.

Future Goals and Aspirations

We’re working on a few customers that you know, we’re very excited about, similar to Nubank, and we’re doing our best to kind of launch them throughout this year. And I think if we can bring some of those over the line it’s gonna be a year we’ll definitely not forget as a company, and yeah, executing well on this is definitely what we’re most excited about.