The competitive landscape for banks and credit unions is rapidly changing as technology and customer demand are bringing new players into the market. There was a time when geography and branch location played a significant role in how consumers selected their bank, but digital options, tech savvy millennials, and a post-recession customer untrusting of the banking industry have created opportunities for them to use the digital wallet.
T-Mobile recently launched its Mobile Money platform as the latest company in this space. T-Mobile is targeting its current customers who haven’t traditionally had bank accounts, who generate less income, and/or are uncomfortable or unable to use traditional banking services. According to T-Mobile marketing executive Andrew Sherrard, “One of the main reasons we’re doing this is to deepen our relationship with our customers.” Compared to a number of these services already available, such as Simple, PayPal, Google, Apple and Lemon, T-Mobile customers, who add Mobile Banking to their services, are exempt from the many fees charged by other digital wallet services.
Nationally syndicated consumer expert Clark Howard gives this synopsis of T-Mobile’s position with a message to banks.
Key Factors for Bank Marketers
Traditional banks and credit unions are at risk to losing customers and falling behind if they don’t take a serious look at their use of technology. The pace of change when it comes to technology and the web is fast and furious. How much of this will matter to your institution to meet the needs of your customers? Consider the following key factors to address how this will impact your growth.
- Revisit your competitive analysis to include new competitors or outliers you may not have thought as competition. If your customers have access to using them, they should be in the mix.
- Be clear on your target markets and the products and services they need and want. According to Aite Research, from 2008 to 2011, banks lost one million checking accounts. Are you losing customers and why are they leaving? Do they want services you don’t offer?
- If you don’t know the answers to the questions above, conduct a survey to get feedback from your customers.
- Where are your growth opportunities? According to a panel convened at the National Retail Federation show in New York, in 2017 millennials will eclipse baby boomers as the largest generation extant. Smartphones are appendages to millennials bodies. Are you planning to meet the needs of this generation?
- Apps for smart devices will be expected from companies going forward. How does this fit within your strategy and delivery of products and services?
T-Mobile was well positioned to move into the mobile banking space to serve the underbanked segment. A large percentage of their customer base already uses prepaid contracts. Prepaid phone customers tend to be younger. They’ve eliminated carrier contracts and provide interest free loans for smart phones as well. No fee mobile banking is an attractive option for this market.
Where can your institution find a niche to reach your target market with technology? Do you think the digital wallet is a concern for banks?