Apps + plastic
Benedict Evans observed that Apple has a history of killing plastic be that floppy disks, CDs or payment cards. Yet many fintechs are launching with a physical card as an integral part of their mobile experience. They are experimenting with different models of how to marry apps and plastic based upon the different customer problems they are setting out to solve.
Below is a description of some of the different models I’ve observed but it is by no means exhaustive.
I’ve already written about how easy it is to manage spending with new mobile bank Mondo. Mondo currently offers a pre-paid card with an accompanying app. Key features today include the ability to easily load money, track spend and freeze the card if I lose it. Alongside Tandem, Starling and Atom Bank, Mondo’s long term plan is to offer a full mobile first current account experience.
Loot provides the same budgeting service as Mondo but it is aimed specifically at the student market. More advance tools are in the works as is access to tailored discounts and rewards. Osper adds another app to the equation to allow children to leverage a similar tool but with the addition of parental supervision.
Revolut takes the app plus pre-paid card model and applies it to the needs of frequent travellers who risk being hit with unexpected costs when spending abroad with their bank’s credit or debit card. From the app you can transfer money from your current account into a currency of your choosing and then spend it overseas using your Revolut card without having to worry about hidden fees or conversion charges.
If you are starting to feel like this is awful lot of cards for one person to manage that’s where Curve comes in. Load up details of all your payment cards into the Curve app and then, when you spend money on your Curve card, simply choose which of your other cards you want this payment to come from. For now they are targeting the self-employed and freelancers who need to jungle personal and business cards.
There are also apps that will soon get plastic, or at least I believe they should (I should stress I have no inside knowledge).
By leveraging a P2P network, Transferwise enables consumers to transfer money overseas without incurring the high fees normally associated with these transactions. Its limited to folks who are transferring money between accounts. A pre-paid card, which could be used abroad, would dramatically increase their total addressable market.
Splittable helps people sharing accommodation to easily track their household bills so they know who owes who what. It seems natural that Splittable will someday to offer somekind of payment card so that sharers can make purchases like groceries together and have this data flow directly in the app.
It’s tempting to dismiss the plastic element of this equation as a temporary fix until contactless payments, or in-app payments, eliminate the need for these startups to offer a “physical card”. I’m an Apple fan-boy but for me that requires too much of a leap of faith to believe that cards and cash are about to disappear.
A more substantive challenge is to say that what the market is waiting for is a bank, whether established or challenger, to deliver a compelling mobile experience that offers the value described above as features in one app plus card product. The average consumer doesn’t want multiple apps, let alone multiple cards, to manage their financial lives. They just want one. Startups playing in this space must expand their offering to survive.
Again I’m skeptical. Intuit’s CEO, Brad Smith, likes to say of the transition from desktop to mobile apps that you can’t diet an elephant into a mouse. For similar reasons I’m not convinced a full current account app is exactly what all customers are looking for on mobile. What I love about Mondo is that it does one job, money management, exceptionally well. Like all the best apps it is lightweight. As a result, until something else comes along to replace them, mobile will tend towards the unbundling of products, rather than the other way around.
My best guess is that the app plus card model will be with us for at least several years to come. That said no-one has perfected yet how best to marry mobile and plastic. What we can say though is that there are certainly plenty of clever people trying to figure it out.
Who have I missed of my list? Are there other apps you use that should have plastic? Can they all co-exist or will one model emerge as the winner? Is the blending of apps and cards an end point or merely a point along the journey towards something else entirely?