Turiya Goetze, a 23-year-old teaching assistant in Kansas City, Kan., found herself looking for a new bank this summer. Her student checking account at a large national bank had expired, and she was worried about paying lots of fees on a traditional account.
Then she heard about GoBank, one of a new breed of mobile banking services aiming at fee-averse customers, especially 20-somethings or “millennials,” accustomed to doing everything on their smartphones. She now uses it as her sole bank.
Ms. Goetze is a fan of a GoBank feature that lets her check her balance quickly on her phone, without having to log in to her account. “I love, love, love it!” she said. She doesn’t pay any monthly fee; GoBank lets users choose their fee (from zero to $9 a month), and right now she opts to pay nothing. But she said she may start paying $1 a month, now that she has been using GoBank for a while and likes it. She estimates she would have had to pay about $12 a month with a traditional account.
Old-fashioned banks, of course, also offer mobile banking apps, and branchless banks aren’t new either. But the upstarts, which include Simple and Moven, especially appeal to younger customers and others on a tight budget because they shun most fees, including dreaded overdraft fees, and have no minimum balance requirements. Each differs slightly in their offerings, but all aim to simplify payments and help users closely track their spending. They’re meant to be used when customers are on the fly, rather than sitting down at a computer.
The new alternatives work with traditional banks to hold deposits, so the money in your account is F.D.I.C.-insured. GoBank is the mobile banking arm of the Green Dot Corporation, which markets reloadable prepaid debit cards and owns Green Dot Bank, which holds the funds deposited via GoBank. Simple and Moven are in effect banking services, rather than banks, but they work with traditional banks to handle the actual banking functions behind their mobile apps. Simple’s deposits are held at Bancorp Bank, based in Delaware (a spokeswoman said Simple may also partner with other banks in the future as it grows), while Moven’s are held at CBW Bank, which is based in Kansas. But customers access the service through their mobile apps or websites.
The new mobile banks are gaining in popularity. Simple became available to the public in July 2012 and now has about 80,000 customers, said a spokeswoman, Krista Berlincourt. Simple currently requires users to email a request for an invitation to join, before allowing them to register. The approach acts as a fraud deterrent and also lets the company ramp up its systems to meet demand, she said.
Moven is still in its testing phase, and also asks customers to submit an invitation, said Alex Sion, Moven’s president; he says the service has “a couple of thousand” customers. One of its distinctions is that it offers users the option to make payments directly from their phone, by tapping the phone on a payment terminal, he said.
The new mobile models are evolving, but show promise by focusing on what the customer wants to do, rather than relying on banking terms that most millennials don’t care about, said Jennifer Tescher, chief executive of the Center for Financial Services Innovation. Simple’s users, for instance, can see their “safe to spend” balance, which takes into account pending bills. Young people like to have quick access to check their balances, she said, because they have been hard hit by the slow economy and are on tight budgets. “They care about having a terrific user experience that’s easy to use and understand, and works in real time,” she said.
Jim Bruene, founder of the Netbanker blog, said the new mobile banks had a “hip” aura that appeals to young people. GoBank, for instance, offers a budgeting tool called Fortune Teller. Users can ask whether a purchase for a certain amount is a good idea, and the system will respond based on your spending — usually with a mildly sarcastic remark (“Think. When did you last see your mind?”).
