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BankMobile Introduces Fee-Free Branchless Banking

At a time when traditional banks are vying to capture the hearts and money of digital consumers, BankMobile joins the fray as the first mobile-only bank in the U.S. that has absolutely no fees. While not the first branchless bank, BankMobile hopes to profitably build scale with an easy-to-navigate platform and straightforward offer.

Subscribe TodayIn a bold move by innovator and visionary Jay Sidhu, chief executive of Customers Bancorp, a Pennsylvania-based community bank that has 13 branches, BankMobile joins the ranks of Simple, Moven, GoBank, Amex Serve, etc. Unlike many of its competitors, however, BankMobile is an independent operating digital banking division of a real bank. With no fees and no branches, BankMobile hopes to financially empower Millennials, middle class Americans, the underbanked, Gen-X and tech-savvy Baby Boomers.

During the introductory press conference, Sidhu made it clear that he wanted BankMobile to be different from every other bank and credit union. Their ‘Phase 1’ offering includes a totally fee-free checking and savings account (joint accounts are offered as well), a personal line of credit (max value of $5,000), access to 55,000 fee-free ATMs, and a debit card that can be used with Apple Pay. It was stated that BankMobile will be ‘proponents of NFC technology’ and ‘support all innovative technologies including Google Wallet.’

“We are here to revolutionize banking … to help those who have often been victimized by the industry through excessive fees and we will always be a bank built by, and for, the people.”
— Luvleen Sidhu, BankMobile

With an introductory message to interested consumers to ‘Join the Revolution,’ it is clear that BankMobile wants to differentiate their offering. Luvleen Sidhu, Chief Strategy & Marketing Officer, stated “We are here to revolutionize banking … to help those who have often been victimized by the industry through excessive fees and we will always be a bank built by, and for, the people.”

Part of this ‘revolution’ is to reward customers who set up direct deposit. Any customer who sets up direct deposit of their paycheck will be granted VIP Status. Customers with VIP status get two additional benefits:

  1. Free financial advice from a financial advisor
  2. Fee-free ATMs nationwide
BankMobile Mobile App1

An engaging website design and mobile banking product description were developed in conjunction with the Adrenaline experience design agency.

BankMobile has staked the claim that they are America’s first only no fee mobile bank. Throughout the press conference, CEO Jay Sidhu, a co-founder and former CEO of Sovereign Bank, had some pithy quotes about how some banks make money (“fees are an addiction”) and what some banks consider banking innovation (“dog biscuits and coin counters”).

“Innovation has stalled in the banking industry. While the rest of the world is in the digital age, banking remains stagnant. We are here to change this and bring banking to the 21st century. We will ensure our customers feel involved in the progress of this bank and are offering them a truly enjoyable banking experience – different from anything they have experienced before.” – Jay Sidhu, CEO BankMobile

BankMobile has a clear roadmap to grow their business. Their goals are aggressive. They want 25,000 customers by next year and around 250,000 customers after five years of operation. Based on the information they shared during the press conference, they have an infrastructure and a strategic plan that they believe will allow them to deliver on their lofty goals.

BankMobile’s parent, Customers Bank has 1.2 million student checking accounts across the country as part of a partnership with Higher One Holdings Inc. As students graduate, approximately 200,000 – 250,000 a year, BankMobile will be looking to migrate those accounts. According to Luvleen Sidhu, they expect 20% – 30% of these accounts to migrate to a new BankMobile account.

Additionally, they have a strategy to reach out to the 170+ million people in large affinity groups. This includes unions, associations, and large companies. If they can only convince a quarter of one percent of this affinity universe to join BankMobile in the next five years, that will be 425,000 customers.

The Adrenaline experience design agency championed BankMobile’s full brand architecture, designing its identity, messaging, marketing strategy, and user interface design. The BankMobile app is powered by Malauzai Software. I asked Ms. Sidhu if BankMobile is simply an off-the-shelf banking solution? According to Ms. Sidhu, “The application is not ‘off the shelf’. Our middleware was developed entirely by us and is owned exclusively by us. We worked with Malauzai to develop significant improvements and innovations through our partnership.”

Sidhu stated that even though they are investors in Malauzai, they are not restricting Malauzai’s ability to market any of their offerings to other community banks. Sidhu also mentioned that the onboarding process that includes joint account and line of credit opening is dependent on BankMobile middleware and not the Malauzai app.

BankMobile has been introduced with basic bank products to serve their intended customer segments. They intend to expand to a full suite of lending products like auto loans, credit cards and mortgages while also adding certificates of deposits.

The launching of a new mobile-only banking app comes at a time when consumers are looking for an improved mobile banking experience. Recent studies confirm that an online or web banking experience modified slightly for mobile is not adequate for today’s digital consumer.

Time will tell if BankMobile will succeed. An above average mobile banking experience, combined with an easy enrollment process, will help them achieve their lofty goals. Whether a business case can succeed where there are zero fees and a continued expectation for mobile improvements and enhancements is yet to be seen. So how is the BankMobile banking experience?

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BankMobile User Experience

Before opening my BankMobile account, I had spent several hours over several days testing most of the features of the app. I think the average millennial and tech-savvy consumer that the BankMobile team is looking to acquire will like the offering. In fact, I think they will love it. The design of the entire app developed by Adrenaline is very straightforward and avoids the unnecessary clutter common with traditional mobile applications. From the pages describing the BankMobile brand to the user interface, the product provides an exceptional user experience.

After downloading the app (both iOS and Android versions are available), I easily opened a checking account on my Android smartphone. The feature that made it super easy to open my account was the application’s ability to scan the front of my driver’s license and the barcode on the back. The account opening app, powered by Mitek, provided me feedback to improve the scan. It told me when I needed more light and when to move my license closer to the phone’s camera.

BankMobile first screen.PNGWhen I was done photographing my license, I answered a few Know Your Customer (KYC) questions, typed in my social security number, created my user ID and password and funded my account via a transfer from an existing bank account. All the requisite disclosures were presented and application review was provided. I’ve tested many online and mobile checking account opening applications and BankMobile’s is among the best, if not the best, I have used.

“This is just the beginning of our journey as a company.”
— Warren Taylor, BankMobile

My Chase mobile banking app and GoBanking mobile app allow me to check my account balances without logging into the app. The BankMobile app provides this capability as well, but does it in a very simple way. I open the app and I see my balance and up to 15 transactions. To do any other function in the app, the app asks me for my pin (after PIN access is already configured).

My other apps require me to swipe to see the balance (which is shown in a different part of the app from where balances are normally shown). In other words, the BankMobile app removes much of the friction from this basic task.

The BankMobile app also has PhotoBill pay and mobile check deposit (both powered by Mitek), person-to-person payments, and you can turn your debit card on and off. The majority of these features are not found in the majority of bank or credit union mobile apps.

The challenge for BankMobile will be to create an overall experience that is different than other offerings for their target markets. By focusing on ‘digital natives,’ the bar is being set by industries outside of financial services, requiring continuous enhancements and increased ease-of-use.

“This is just the beginning of our journey as a company,” added Warren Taylor from BankMobile. “We know that what we have here is groundbreaking, and we look forward to sharing updates with those who seek to become a part of the BankMobile family.” This focus on constant improvement is also important since other banks and credit unions are also starting to improve mobile banking capabilities.

BankMobile is a worthy bank account plus mobile app to add to your active arsenal of financial services applications. The slideshow below provides a visual overview of my smartphone first impressions.


gerbino3David Gerbino is a direct and database marketer with experience in retail and commercial banking, digital marketing, database marketing, marketing analytics, product/household profitability, business performance management, data visualization, business intelligence, and KPIs. A frequent speaker and publisher of his own blog, Gerbino has an affinity for marketing analytics and profitability deeply rooted in his experiences in the direct marketing industry. You can also follow David Gerbino on Twitter by clicking here.

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Comments

  1. Comprehensive and well written article, Dave. This model is perfect for any collegiate-based cu or community bank. Immediately. Student and faculty attraction, active usage, and alumni retention and loyalty. “Sign me up, keep me connected and let me count the ways I will learn, live and forever be yours.” So many affiliations & community partner/supplier opportunities to be tapped into here. Parents too ~ outreach and diversity -geographical, lifecycle and philosophical 🙂

  2. @Lisa, thank you for the kind words and your observations.

  3. Arnau Gines says:

    Great article Dave! Very comprehensive and touchong all the important points of what a new digital bank should be. Did they explain which is the business case? How will they manage to make this profitable? Maybe with the inclusion of loans and mortgages?

  4. @Arnau, since BankMobile is part of a bank holding company, the deposits they generate will generate income from the lending activities of the entire company. They also mentioned that they will be adding more lending products to BankMobile as time goes on. Specific categories mentioned: auto lending and mortgages.

    As far as business case was concerned, they focused on the decline of branch usage and the rise of mobile banking usage.

  5. Simple, Moven and Bluebird all launched no-fee mobile products long before BankMobile. At the end of the day the FDIC deposits are all held by a ‘bank’ or deposit taking institution. These guys are literally 2-3 years behind the pack and claiming a first?? If that’s their idea of transparency, then I’m extremely skeptical.

    BK

  6. Jay Sidhu says:

    @BrettKing, while other companies have launched no fee bank products to an extent, BankMobile is the only bank that is truly 100% no fee (i.e. not even a statement copy fee, etc.). Other neo banks may not charge overdraft fees, but they don’t offer overdraft protection. BankMobile is the only bank in the country that has no overdraft fees and offers overdraft protection to all its customers. Additionally, BankMobile is not just launching a checking product, but an entire suite of services and is unique in several other ways. BankMobile is the only bank that is offering its customers a checking, savings, lines of credit and joint accounts … all of which can be opened on a mobile device with the help of a drivers license (no other bank offers this). BankMobile also provides access to over 55,000 surcharge-free ATMs, a higher savings rate than any of the top four banks in the nation, a personal banker and access to a free financial advisor to all VIP members. Lastly, BankMobile is the only bank that has been developed through crowdsourcing and which will continue to innovate itself based on the input from its customers. Brett, we compliment you for writing books about potential disruption opportunities in the consumer banking space globally. We agree and have started a new revolution in banking. Let’s get Moven and BankMobile to continually innovate and set new standards for banking.

  7. Jay,

    Firstly, thank you for your kind comments on my books, and I’d be happy to work with you on resolving some of the issues BankMobile has.

    As you know the Neo-Bank club is very small and we’re a tight nit bunch that frequently works together. The guys at Simple, Bluebird, Atom, Fidor, Soon.fr and ourselves at Moven have all collaborated at various stages – we’re category creators as a group. We welcome others into this unique club, because ultimately our fight is not with each other, but against the big banks who are stuck in a 19th Century modality of banking. So I applaud your efforts, but you need either to do some more rigorous fact checking and research, or dial back on the rhetoric if you don’t wish to isolate yourself from a group that could be your biggest supporters and allies.

    Firstly, let’s examine the “only bank that is truly 100% fee free”. If your point is that you don’t charge for overdrafts and you’re the first mobile bank that doesn’t charge fees on overdrafts, then you’d be technically correct, although Simple, Moven and Bluebird don’t charge overdraft fees either – we just don’t offer overdrafts. Otherwise we offer a bank account that is used by our customers often as their primary bank account without fee, so we are fee free bank accounts. Just not fee free bank accounts with overdraft. For many millennials who don’t want overdrafts because of the risks associated with managing a potential growing debt issue, an overdraft feature could be a negative.

    Secondly, your point on joint, checking, savings accounts is well taken – but the point of being a neo-bank increasingly is that the old product classifications are mostly redundant. The savings rate play is a strong feature, but again nothing new that shows a unique mobile flavor – why not offer a higher interest rate based on some crowdsourced metric instead of just a higher rate. The use of checks is another example – you can’t be a truly mobile bank if customers can still issue a paper check. You are then a mobile-optimized checking account, not a mobile-only bank account.

    Lastly, I’m sure you actually realize that BankMobile is not the first bank that has been developed via crowdsourcing. If you’d like I can list off the 14 banks in the world that have used crowdsourcing to launch new brands or products in banking like Fidor, FRANK by OCBC, DBS Singapore, etc, including Moven which launched with CREDScore based purely on social media interaction and crowdsourced feedback. If you were truly crowdsourced and social, then why not allow customers to open their account using their Facebook credentials like Fidor does, instead of the typical KYC process you’ve got in the app as it stands.

    I’d be delighted to give you the chance to talk about how you truly intend to differentiate BankMobile in the future on my Radio Show BreakingBanks (.com) if you wish (72 countries), but Jay if you’re going to make some claims about being first – either truly be first, or be accurate in staking the claim. We’re all in this together and we need to watch each other’s back – not undermine the category by competing against each other when there are 100 million unhappy US Checking account customers in the majors who still have to go into a branch to get stuff done (as mentioned in this survey
    http://www.cbsnews.com/news/the-most-hated-banks-in-america/)

    Ping me on brett@moven.com if you’d like to talk or if you’d like to come on the show to clear the air.

    I’m all for new standards – but I’m also for maintaining standards of accuracy and transparency.

    BK

  8. Brett,

    Thanks for your response. I’d be happy to be on your radio show and talk about opportunities for disruption in consumer and business banking.

    BankMobile and its parent is a federally charted 5 star rated profitable bank with about $500 million of capital behind it. We are not just another start up or neo bank. Our mission is to reach the 100 million + millennials, middle income families, under banked or unbanked documented Americans , provide them effortless banking experience and also save them billions of Dollars. We don’t want to bash big banks or other traditional banks. They are also serving Americans and assisting with our economic growth. We want to show them that they too can innovate and improve their offerings to help all our citizens and businesses. Branch banking is dying, not banking.

    Like you, we believe in absolute transparency and highest level of integrity. Our claims are substantiated by facts. However, let’s please not argue about that. Let’s all work together to improve quality of banking service for the betterment of our society. We have once in hundred year opportunity to make a real difference in way banking is delivered.

    I will ping you directly and let’s chat directly about how we all can join hands in making the new banking revolution a reality.

    All the best,
    Jay

  9. Jay,

    Fair enough. Let’s work together to get it right for customers!

    On the claims, well, I’ll let it lie. I will direct you to page 258 of BANK 2.0 where I show a crowdsource case studies on UBank established through crowdsourcing in 2008/2009. If you’d like some more case studies so you can appropriately adjust your stance, I’d be happy to help your marketing agency.

    We look forward to having you on the Radio Show! Make sure your Daughter joins us too!

    BK

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