T-Mobile expands into banking with ‘mobile-first’ checking account

All banking services are conducted through a smartphone app. (T-Mobile)

T-Mobile continues to chart its path into new territories for a wireless carrier. The company launched a new banking service for its customers with T-Mobile Money, a nationwide checking account for consumers, offering no fees and up to 4.00% in annual percentage yield (APY). The carrier has been testing the service in a pilot program since November 2018.

The move is the latest in a string of entries into new markets and business for T-Mobile, which is in the midst of a proposed merger with Sprint. This isn’t the first time T-Mobile has offered such services, either. It launched "Mobile Money" in 2014 but shuttered the offering two years later.

T-Mobile has launched the service with BankMobile, a mobile banking subsidiary of Customers Bancorp launched in 2015 to provide digital banking services to unbanked and underbanked consumers. BankMobile has focused on student banking through partnerships with universities as a bank-as-a-service (BaaS) solution. The company is now offering white-label mobile banking solutions to other companies using its proprietary and patented software. T-Mobile appears to be its first customer.

“Traditional banks aren’t mobile-first, and they’re definitely not customer-first,” said John Legere, CEO of T-Mobile. “As more and more people use their smartphones to manage money, we saw an opportunity to address another customer pain point.”

T-Mobile Money won’t charge any monthly fees, or overdraft or transfer fees. There is no minimum balance requirement for the checking account. The account comes with a MasterCard debit card with ATMs in over 55,000 locations across the U.S., though T-Mobile said its customers can also use out-of-network ATMs without paying ATM fees.

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It appears T-Mobile's primary business model for this service is just the classic banking business model of making money from other people's money.

All banking services are conducted through an app on a smartphone, including depositing checks, paying bills, setting up direct deposit, sending checks, transferring money and even using mobile wallets offered by Apple, Google and Samsung.

The offering is available to anyone with a smartphone, and customers do not have to be T-Mobile subscribers to open up a checking account with T-Mobile—though the 4.00% APY offering is only available to customers who are also subscribers to T-Mobile’s qualifying wireless plans.

BankMobile, which is FDIC-insured, is considered one of the fastest-growing banks in the country, and is ranked within the top 15 banks in the U.S. in terms of number of consumer checking accounts serviced.