T-Mobile has taken the mobile banking service it created with BankMobile nationwide.
The app, which is called T-Mobile Money, was launched as a pilot in November. It offers basic mobile banking, bill payment and person-to-person payments. It also comes with a checking account and a debit card (including a virtual card option). It is providing 4% interest to T-Mobile wireless plan customers on deposits up to $3,000; after that, the rate drops to 1%.
According to T-Mobile, the offering comes with no fees and fee-free overdraft protection of up to $50.
The company started noticing that two-thirds of Americans use their phones for digital access to banking, according to Tiffany Minor, director of marketing for financial services business at T-Mobile. T-Mobile decided that, with the help of BankMobile, a unit of Customers Bank in Wyomissing, Pa., it could offer better digital banking services than traditional banks, she said.
“Less than half of the big banks have a digital infrastructure, they don’t have a plan or a strategy, and if they do it’s a bolt-on on top of a traditional bank, but not born digital,” Minor said. “We started looking more and more into this, it piqued our interest, and we said: This whole digital banking thing is really hard, and it’s really expensive, people are paying too much, and they’re not getting any interest.”
Minor cited the Center for Financial Services Innovation’s estimate that banks charged $34 billion in overdraft fees in 2017.
“Since the financial crisis, consumers have been robbed of a little over $500 billion in interest payments,” she said. “We really felt there was a better way.”
The company decided, though, that a bank partner was necessary, Minor said.
“We don’t have any aspirations to be a bank, they are [a Federal Deposit Insurance Corp.] insured bank,” Minor said. “We selected BankMobile as a partner because they’re very tech-forward.”
T-Mobile wanted the account to have no account minimums (though in order to get the 4% interest, customers have to deposit at least $200 a month), no overdraft fees, and no automated-teller-machine fees in network. It insisted on mobile account-opening and on paying interest on balances.
That 4% interest rate is many times what large banks offer, she said.
“Banking isn’t super sexy, but there are small pieces that make it faster and better,” Minor said. “You don’t want to spend a lot of time banking. You just want it to work, and to give you some value and be easy.”
The app displays the customer’s current balance and the interest rate that money is receiving. It has an ATM locator, the ability to enable or disable the card, as well as tools to easily add the virtual card to a mobile wallet and to pay a bill or a friend.
Minor said T-Mobile has no access to bank account data.
“The bank owns and runs that,” she said.
Why T-Mobile says it doesn’t want to be a bank
There is talk of telecom companies getting into financial services, but Minor said T-Mobile has no interest. One reason is that there are a lot of compliance demands in banking.
“Banks do it well, some banks are more fintech-forward than others, and FDIC insurance is important,” Minor said. “As much as we are using the device as the epicenter to do banking, the reality is we want to make sure that it checks all the boxes for a traditional construct. That’s important for us as it should be for any of the tech giants.”
The other reason is that T-Mobile does not see itself as an expert in financial services.
“We’re the experts in wireless experiences and creating great value — that’s what we lend to the partnership,” Minor said. “[BankMobile] lends all their expertise and banking experience.”
What T-Mobile gets out of the product offering, she said, is customer retention.
“The more products you have, if your customers are happy with them and have a great experience, they will stay longer, and having customers stay longer is good for business,” Minor said.
She also said T-Mobile has no interest in offering other banking products through the BankMobile relationship.
“We’re doing this and we’re staying here,” Minor said. “We’ve got a national launch, and we want to do this really well and stay focused here.”