From Online to Mobile to Mobile-Only

For everyone from lazy millennials in the suburbs to disadvantaged denizens in under-developed regions, this is a game-changer.

It almost seems inevitable. Just as the onset of online banking capabilities upended traditional industry practices, the slew of mobile banking apps now on the market, and the heavy adoption of those technologies by ‘millennials’ in particular, was bound to make even online banking look old-fashioned. Still, the emergence of mobile-first, or even mobile-only, banks is startling.

Of course, it’s not exactly a revolution. . .yet. Take the newest entry, BankMobile, which is actually a division of publicly held Customers Bancorp and the parent entity of Customers Bank. This is a traditional corporation in every sense of the term, with 14 branches/offices in three states and assets listed as $6.5 billion as of August, 2014.

However, BankMobile makes its own characteristics clear with a high level of attention-getting. It bills itself as the “first bank in the country to offer free checking and savings accounts without any fees, as well as a line of credit, access to over 55,000 surcharge free ATMs, and a higher savings rate than the top 4 banks in U.S.” That’s a potent lure in an environment where consumers and institutions routinely shell out billions in overdraft fees.

And then, of course, there’s the technology. It’s not in dispute that many aspects of life that previously took time now can be managed in seconds with a few clicks on the smartphone or tablet, yet it’s still a drag opening a bank account. Now it can be done with an image of the driver’s license, without setting foot in any branch.

That’s just one of the many technology-driven advantages of this form of banking—there are myriad features and capabilities designed specifically to enhance ease of use and expedite every interaction. This is also why, especially for younger consumers weaned on instant gratification without undue effort, the appeal of an all-mobile financial services institution is potentially undeniable.

To be sure, there are other emerging players on the horizon. Check out Number26, a German entry in this dynamic category. There’s a raft of capabilities enabled by the click of a button—for example, money management tools that automatically bundle all cash outlays into pre-defined categories and a ‘push’ notification for all debit card transactions.

But there’s an even bigger picture that deserves attention. Quite simply, mobile banking can effectively change the world by bringing banking to communities that otherwise have no access to it.

M-Pesa, the mobile-phone based money transfer and micro-financing service launched in 2007 took less than three years to become the most successful mobile phone-based financial service in the developing world. Originally created for Kenya, there are now similar services in other developing markets, with many more planned. That’s because they cater to a vast demographic that would have seemed absurd only a few years ago: the millions of people who have no bank account, and perhaps no permanent job or home, but do have a mobile device with a long-distance service provider.

No less a visionary than Microsoft co-founder (and coincidentally world’s richest man), Bill Gates, serving as guest editor of The Verge, lays out his thinking on the idea of mobile banking thus: “In the next 15 years, digital banking will give the poor more control over their assets and help them transform their lives. . .By 2030, 2 billion people who don’t have a bank account today will be storing money and making payments with their phones. And by then, mobile money providers will be offering the full range of financial services, from interest-bearing savings accounts to credit to insurance.”

In retrospect, let’s remember that the arrival of Internet-enabled banking shook the very foundations of traditional banking. It’s almost inconceivable that mobile banking, or let alone mobile-only banking, will have even greater ramifications, but it will. For some individuals and institutions resistant to change, this is troubling. For the rest—those attuned to change and opportunity—it’s the best news in a long time.

Written by Jack Dougal