Mobile Payments Heavy Digital Banks Continue to See Gains
Mobile banking is a surprisingly large part of the mobile payments field. A recent panel from Money 20/20 tipped off our way by Mobile Payments Today revealed that the state of mobile banking, particularly mobile-only challenger banks, is moving along with shocking alacrity.
The panel featured figures from three such challenger banks: Chime, Grasshopper and Varo Bank. Chime and Varo, in particular, discussed the impact of a recent outage that left their customers largely unable to access their money, including making debit card transactions or even checking balances to make sure no one had just swooped in and taken everything.
This, in turn, prompted the digital-only banks to consider what to do in the face of such an outage, which may well happen again in the future at almost any given time. Though no specifics were given, Varo Bank’s CEO and co-founder Colin Walsh noted that, in such events, the bank needs to “…respond quickly” and “…respond empathetically.”
Speed and empathy are indeed important, but will likely only go so far when customers start yelling that they want their money and they want it NOW, or someone’s going to say the magic word, “insolvent”, and that’s the beginning of the end.
Meanwhile, it’s not just consumer banks that are taking their act mobile; Grasshopper has been focused on the commercial banking side of things for some time now, delivering a new proposition to commercial customers. Since commercial banks have pursued mainly retail customers, Grasshopper’s CEO Judith Erwin noted, this has left a substantial opportunity in play for Grasshopper, which it has been pursuing enthusiastically.
Mobile-only banks aren’t a bad idea, though they come with plenty of downsides. Worse, regular banks—those with branches that you can actually go into at any time—have been stepping up their mobile game to the point that they function like a mobile-only bank, but with the key difference that you can physically talk to real people at any time.
It’s likely to make things difficult for mobile-only banks going forward, and they’re going to have to engineer some compelling new reasons to get customers in the door. The original models’ competition might be tough to overcome, but it’s a safe bet challenger banks won’t go down without a fight.