Just as Uber was able to use mobile technology and ease of access to revolutionize the taxicab industry, Customers Bank CEO Jay Sidhu is hoping that his newly launched BankMobile can cause an equal or greater disruption in the banking industry.
With the goal of creating “a bank people can love,” this digital offshoot of his Phoenixville, Pennsylvania bank will offer checking, savings and joint accounts on the new banking service, as well as credit lines of up to $5,000. The bank also includes software that enables potential customers to sign up electronically by just snapping pictures of a government-issued photo ID as well as paying bills by taking photos of them. While these developments aren’t necessarily innovative, they haven’t gone full scale in the banking industry before this point due to security concerns and the continued ease and popularity of using bank branches for opening up accounts. Should this technology run smoothly, customers can open up accounts in five minutes, as opposed to the 25 minutes it takes to open up an account at a branch location.
The other phase of this app that looks to be revolutionary is the lack of fees for maintaining an account. According to company sources, revenue will be raised on interchange revenue, as well as margins on loans. While Sidhu hopes to draw customers to his bank with this cheaper revenue model, some critics are expressing skepticism over the profitability of the model. Being a new bank on the block, it will require effective marketing as well as the ability to deliver on the lofty promises so early in the bank’s existence to avoid getting swapped by bigger banks like JPMorgan Chase and Bank of America, both of which have Internet-only options.
For his part, Sidhu is looking to millennials right out of college, who don’t have a high reverence for traditional banks, to drive the bank’s success. Customers Bank already works with colleges to process student loans and university financial offices, so it has in-roads with the target demographic. To achieve his goal of 250,000 sign-ups in the first five years though, and knowing the huge competition from large banks and mid-sized “neobanks” like Serve and Moven, Sidhu will need to ensure the process is as smooth, and as disruptive, as he hopes, and that millennials expect.