Mobile-only banks skip the tellers for a purely digital experience

By Danielle Douglas

Start-ups, including Simple and Moven, are battling it out with traditional banks for tech-savvy customers. They offer all of the basic services of a bank account — deposits, bill pay, savings — without overdraft and maintenance fees.

The catch? You have to have a smartphone to get an account.

Smartphones have become the center of financial services as companies latch onto technology that could help them reach the millions of people at the margins of the system at a fraction of the cost of traditional banking.

Researchers at CEB Tower Group estimate that banks spend roughly $1.34 for tellers to process a transaction in a branch, while the same transaction on a smartphone costs one-tenth of that amount.

“Basic retail banking products — checking, savings and credit — have low value and are extremely expensive to sell,” said Alex Sion, president of Moven, which has thousands of users. “To make money, banks either try to sell retail customers on loans or hit them with punitive fees.”

All of the major banks offer mobile apps, but the technology is still tied to an old-guard operation with high overhead costs that make it difficult to provide accounts with little to no fees. Without a physical presence, mobile-only providers say they can keep costs to a minimum.

Companies like Moven and Simple partner with FDIC-insured banks that handle the banking functions of their mobile apps, house customers deposits and issue debit cards. (CBW Bank in Kansas works with Moven, while Bancorp Bank backs Simple.)

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