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Pay-what-you-want GoBank puts mobile users first

Hadley Malcolm
USA TODAY
  • GoBank is first bank designed especially for mobile use
  • There are no fees and a pay-what-you-want membership structure
  • Bank is especially aimed at youngest consumers who are native to mobile

A new player has emerged at the forefront of mobile banking with the hopes of capturing the nation's youngest banking audience and setting the tone for what it means to bank virtually.

Launched to the public on Tuesday, GoBank is the first bank designed specifically for mobile use. All functionality is available through its app, everything from opening your account to paying bills to managing your budget.

The bank, which is FDIC-insured, offers both a checking and savings account, a debit card, mobile check deposit, bill pay, person-to-person payments, a budgeting tool, direct deposit, and a network of 42,000 ATMs.

GoBank is the first bank designed specifically for mobile use.

And what may prove to be most appealing to potential customers: There are no fees for anything. There are no overdraft fees, no ATM fees, no minimum balance requirement, free person-to-person payments no matter what bank the recipient uses, and free bill pay.

In fact, GoBank shuns perhaps the most irritating part of being a bank customer in recent years and takes it to the opposite extreme: Customers get to decide how much they will pay each month for the service. They can set the amount between $0 and $9 a month.

The "pay what you want" fee structure is part of CEO Steve Streit's way of being customer-centric.

"We work for tips," he says. "The downside is nobody may pay us anything. But I think most people will pay us something."

Created with the burgeoning Millennial customer in mind, GoBank's mobile-only strategy takes advantage of the ability to focus solely on a clean, intuitive app over the development of thousands of branches, and appeals to the digital way of life that comes naturally to the country's youngest adults.

GoBank has been in beta testing since January, acquiring fewer than 10,000 customers by invitation only between then and now. While the test period attracted users between the ages of 35 and 45, Streit expects that to drop to the 20- to 35-year-old range now that the app is open to the public. The bank is being especially marketed to college students, with a partnership that will include promotional displays in 555 of the nearly 700 college bookstores operated by Barnes & Noble.

"It's the ultimate account for someone new to banking because you can't screw it up," says Streit, who also adds that he thinks the mobile bank will be appealing to a younger crowd who is "old enough to have a job but young enough" to not consider branch-based banking the norm.

Indeed, GoBank seems to be tapping into a growing trend toward branch-less banking among its target audience. A Federal Reserve survey from last March found that while those 18 to 29 make up 22.4% of all mobile phone users, they account for 44% of mobile banking users. Though data show that online banking is still preferred. A survey out last month from Market Rates Insight shows that just 6% of Gen Y respondents indicated mobile banking as their preferred method of banking.

"It's still a technology that's in the beginning stages of catching on, so for them to create a whole bank account around it is bold," says Claes Bell, a senior banking analyst with Bankrate.com, of GoBank. "This is going to be a test of how willing people are to bank through this channel."

Bell also questions whether GoBank will be able to maintain such a lenient fee structure. "I think at some point they'll come up with a hard price," he says. "Maybe people will sign up and want to pay $5 or $7 or $9, but I think a lot of people will sign up and say, hey I'd rather pay $0. But I do think it's a good way to get people in the door."

The new bank reminds some of a cross between the best of mobile apps and the features many prepaid cards have started offering, which makes sense coming from Streit, who created the Green Dot prepaid card 14 years ago.

"It's sort of part of a new breed of financial products," says Karen Biddle-Andres, director of networks at the Center for Financial Services Innovation. "It's a traditional bank account that's really dressed up with a lot of the feature functionality and user experience prepaid cards have actually been testing and developing — a great mobile experience, some really cool budgeting features. That's where financial services is going."

You can log on to GoBank.com, but it's designed for mobile use.
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