Can T-Mobile connect customers with mobile money accounts?

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Mobile money accounts — a stripped-down banking and deposit transfer service offered by mobile carriers through banks — have done well overseas, but have mostly failed to take off in the United States.

T-Mobile is looking to change that by launching a checking account service with BankMobile, the digital-only subsidiary of Customers Bank in Wyomissing, Pa.

The service, called T-Mobile Money, offers the operator’s wireless customers 4% APY on balances up to $3,000 and 1% on any amount over that as long as users are depositing at least $200 a month. BankMobile charges no account fees and directs users to Allpoint’s ATM network.

Observers said the approach could pay off for both T-Mobile and BankMobile.

“The future is about understanding consumer behavior and getting constant engagement from the consumer,” said Peter Longo, head of Axiom Bank’s mobile efforts. “If they’re able to integrate a financial service, you’re going to your T-Mobile money account to get rewards for your cellphone account and other things.”

The account’s features and T-Mobile’s recognizable brand have the potential to reach unbanked and millennial consumers, Longo said.

“The crowd that they are going to market to, in general, doesn’t really care that it’s not a ‘real’ bank,” he said. “The millennial group is less concerned about having a 90-year-old bank behind a product, but they trust T-Mobile.”

But others are not as optimistic. They caution such offerings will bump up against existing mobile banking services available from large banks and fintechs.

“Can it work in the U.S.? It can,” said John BaRoss, who leads a financial inclusion nonprofit called Fincclude. “I have my doubts, [as] I just don’t see any meaningful trends or anecdotal evidence, except this one example with T-Mobile, that there’s any seriousness for U.S. telcos to go after mobile financial services as a strategy.”

Neither T-Mobile nor BankMobile responded to a request for comment.

The T-Mobile-BankMobile partnership appears to be the first such arrangement involving a major U.S. mobile network operator. Such ventures have enjoyed success in Africa, India and parts of Europe.

Vodafone’s M-Pesa is the most successful of these endeavors, particularly in Kenya with over 20 million users. The service also is available in India and parts of Eastern Europe. MTN Group, Orange and Telenor also have significant subscriber numbers in various regions worldwide.

T-Mobile has previously attempted to court unbanked customers. In 2014, it launched a prepaid card, aiming to use mobile account access as a selling point to attract underbanked consumers. A year before that, it launched the Softcard mobile wallet in a joint venture with AT&T and Verizon, which is now defunct.

Longo said T-Mobile’s foray into financial services could entice other large brands to offer similar services. Community banks may also be able to step in as a partner.

“These kinds of opportunities weren’t available 10 years ago,” he said. “To me, this is encouraging. When these opportunities were available in 2008, brands would be talking to a Bank of America or Chase. But those institutions can’t pivot the ship as quickly as community banks can today to get such a partnership off the ground.”

Deposit relationships between fintechs and small financial institutions have become more common. Lincoln Savings Bank in Cedar Falls, Iowa, for instance, has fostered partnerships with the popular microsavings app Acorns and the challenger bank MoneyLion.

“Most fintechs and challenger banks don’t want to undergo the charter process,” Longo said. “They would prefer to do these hosting agreements when they can find established banks. It’s really quick to spin up these affinity banks. This is one of the first examples of what I thought was going to be an explosive growth area a year or two ago.”

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