A lot has happened at BankMobile since Retail Banker International reported on the US digital-only bank a year ago. Robin Arnfield talks to Dan Armstrong, BankMobile’s MD and chief digital officer, about the changes that have already taken effect, and what we can look forward to in 2017
“There’s a lot that’s changed with BankMobile,” Dan Armstrong tells RBI. “We’ve acquired a student refund disbursement business, which is generating hundreds of thousands of new chequeing accounts annually.
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“We’re also relaunching our digital platforms in early 2017, and introducing a white-label banking platform for major retailers and other firms to sell branded chequeing and savings accounts. Our first major white-label customer launches early in 2017. Plus we’re working on spinning off BankMobile into a separate chartered bank in 2017.”
BankMobile describes itself as a fintech with a banking charter. The apps and middleware for its new digital platforms were developed by the BankMobile Labs innovation centre, and replace software from an external supplier.
“Unlike other digital-only US banks, we’re a full-service bank offering demand deposit accounts with cheque-books, savings accounts and lines of credit, and we will be introducing credit cards in the first quarter of 2017,” says Armstrong.
“BankMobile has no fees and pays interest at 25 basis points above the top four US banks. We offer fee-free access to the 55,000 ATMs in the Star Network, and, if customers deposit over $500 a month into their BankMobile account, they don’t pay fees to use any US ATM,” Armstrong adds.
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By GlobalDataBankMobile offers photo enrol – enabling a new customer to take a picture of their driver’s licence and have their information automatically loaded into the account application. It also offers customers access to a personal banking team to help with tasks such as improving their credit score.
Originally, BankMobile targeted millennials, but has since found that it attracts consumers from older segments.
“We are finding that digital technology-first people cover all sorts of different age groups,” explains Armstrong.
“We have a lot of older customers as well as underbanked people such as seasonal and temporary workers. BankMobile is a lot less millennial-focused than we had envisaged and as our original adverts suggested.”
Acquisition
In June 2016, Customers Bank completed the acquisition of New Haven, Connecticut-based Higher One’s student chequeing account and refund management disbursement businesses.
Higher One serves around 800 campuses across the US, providing them with a technology platform for disbursing financial aid through deposit accounts opened at partner banks.
Customers Bank merged Higher One’s refund management disbursement business – renamed BankMobile Refund Management Service – and student current accounts with BankMobile.
“Our strategy with BankMobile Vibe, our student chequeing accounts, is about customers for life. When they graduate, student customers can upgrade into a BankMobile Bold account which offers savings products and loans,” says Armstrong.
Market research conducted by BankMobile with its student customers found that a key issue for students is access to credit.
“So we are developing a capability to look at BankMobile Vibe customers’ deposits and debit card behaviour while they are students over several years,” says Armstrong.
“Then, once the students graduate, if they don’t have a credit history, we will offer them credit based on their current account behaviour.”
BankMobile 2.0
BankMobile’s relaunched banking platform and app, BankMobile 2.0, will have extra features and a more responsive user experience, based on technology developed by BankMobile Labs.
“We will be offering a number of product enhancements,” Armstrong says, “including a simplified line of credit and overdraft regime, and a higher level of personal financial management categorisation.
“Our new line of credit product will be similar to what we have now, but will offer non-variable pricing.”
Armstrong says BankMobile is working on the third quarter 2017 release of a feature offering management for family accounts.
“This means individual family members can be given a debit card and demand deposit account, as well as accounts for small business people and entrepreneurs,” he says.
White-labelled platform
BankMobile is actively seeking white-label partners as well as licensees for its API.
“We’ve built our new platform not just for BankMobile but also for Customers Bank, which will be moving its digital customers onto our core banking system in mid-2017, and for our student customers, who are currently on a separate core banking system,” says Armstrong.
“So we decided to offer a white-labelled banking product set in the market, and have signed up a major US retail brand with 4,000 stores to resell our account under its own brand name.”
BankMobile developed four programmes:
- BankMobile-branded co-branded apps
- Partner-branded apps
- Partner-branded app development
- API banking
Analyst comment
“While I applaud BankMobile’s efforts in converting student refund disbursement customers into chequeing account customers, it will be very difficult for the bank to take college-age customers and grow and change with them over the next 10-20 years,” says Ron Shevlin, director of research at US-based Cornerstone Advisors.
“Historically, no bank has ever been able to do that, but the reality is that college students’ banking needs are more homogeneous than that of the adult population.”
“I’m not seeing where the retailer opportunity is for BankMobile. A number of large US merchants are taking their cue from Starbucks and offer apps that let customers load funds for use in store.
“Why would a retailer want or need to offer a chequeing account with all the service and regulatory headaches that come with it? Because BankMobile will handle all that for them? I’m sceptical. I doubt that many retailers will see owning the chequeing account relationship as key to driving sales.”<
