WASHINGTON — It used to be that the JPMorgans of the world only worried about losing customers to Wells Fargo or Bank of America. But that universe of competitors has grown to include T-Mobile, Walmart, Google and a host of other retail, tech and telecom companies that are now operating like banks.
These upstarts are gaining footing in the banking world with prepaid debit cards that customers can use to pay bills, make purchases and deposit checks via a smartphone camera — pretty much all the things you can do with your traditional checking account. And they are piquing the interest of a highly coveted group that traditional banks have struggled to attract: young people.
A new survey of nearly 4,000 Americans by Accenture found that 72 percent of people ages 18 to 34 would bank with Walmart, Google or T-Mobile if they offered banking services. Of the nearly two dozen companies that researchers asked about, people were most willing to sign up with Square or PayPal because of the relationships they already have with the companies. Nearly one-third of those polled said the same about T-Mobile, Costco, Apple and Google.
These companies possess a few things that could really pose a threat to banks: an existing customer base, scale and an ability to quickly adopt new technology.
Take T-Mobile, which has 49.1 million wireless customers, an established base for the telecom to pitch its prepaid debit card. Many of these folks use T-Mobile’s prepaid wireless phones (15.5 million) for the same reasons that make prepaid cards attractive: There’s no credit check and no long-term contract. And with more people using their mobile phones to transfer money or take pictures of their checks for deposit, having the same provider manage most of the steps in that process could be appealing.
The biggest game-changer for traditional banks is Walmart’s incremental expansion into consumer banking. The world’s largest retailer has rolled out everyday low prices on check cashing, money-transfer and checking accounts in the past few years.
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