Despite attracting a solid user base – 1 million active deposit customers – BankMobile's future is uncertain:
Customers Bank noted in Q4 2018 that it expected to retain BankMobile for the next few years but will"regularly evaluate the best options for BankMobile," Customers Bank CEO and Chairman Jay Sidhu said, which could suggest a potential sale of the unit.
Doubling down on white label partnerships could ultimately help BankMobile prove its worth as Customers Bank evaluates the unit's future — here's why we think so: BankMobile has not yet reached profitability, underscoring a struggle fintechs are facing across the board. Most fintechs have beenwith profitability as well as with converting customers to use them instead of primary banks. Customers Bank highlighted that BankMobile's growth and maturity are expected to power the unit to profitability by Q4 2019. But the firm might be more successful pursuing a new strategy with the infrastructure it's built into BankMobile, like white labeling.
Sidhu said the firm expects white label banking to"add significant new customers and deposits to our bank over time." It's already begun pursuing white label partnerships, making mention of one in April which has generated nearly $50 million in deposits, without specifying the partner.
White labeling has been a successful strategy for other neobanks. Moven, for example, offers Banking-as-a-Service solutions to established banks, including TD Bank, on top of its direct-to-consumer banking products. It ultimatelyits business into two last year, and its pivot to more of a business-to-business model highlights both the early headwinds US neobanks faced and an alternate approach they can take.
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