Mobile Banking market ready for takeoff?

Tom Paine

As I described in a recent post, Customers Bancorp’s BankMobile subsidiary is planning for a merger with a listed SPAC before the end of this year.

There’s been an enormous amount of activity in the mobile banking space. Deals are popping all over the place:

In late November the digital bank Current raised a $131 million Series C. Current claims 2 million members, about the same number as BankMobile.

Current has indicated in the past that it does not intend to pursue its own banking charter, but will instead relay on partnerships with banks.

San Fransisco-based Chime closed a round in September that valued it at $14.5 billion. Chime says it has more than tripled its transaction volume and revenue this year. Chime’s CEO says the pandemic has served to hasten the movement towards digital banking.

Step, a teen-focused mobile banking service, announced this week it has raised $50 million in Series B funding after growing to over 500,000 users two months after its launch

SoFi, which has student loans making up much of its portfolio, finally got preliminary approval for a US banking charter. SoFi bought Delaware-based ZenBanx back in 2017 and still has ops there, but held off from obtaining a bank charter until now.

In fact, there are firms converging on the mobile space from all directions.

Philly-based startup cred.ai has chosen the credit card as its ticket of entry, but its still in beta. Its funded for $18 million, by some of Philly’s entrepreneurial elite.

The website PYMNTS.com maintains a ranking of its top ten digital banking apps.

As for BankMobile (to be spun off as BM Tech), its strategy will likely be to not chase the big money, relying instead on its college student base and more white label accounts such as its T-Mobile relationship, and keeping customer acquisition costs low. It will begin life as a public company with $20 million in cash. But how its received by the public market (as one of the few pure plays it could be attractive) might alter its plans.

And of course, the big banks will be waiting to pick up the best.

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