An Indian fintech that offers banking services for people immigrating to the United States has rolled out a phone plan product, in a move that follows a trend of financial institutions seeking to increase customer stickiness with niche services.
Bank accounts and phone plans are two of the most important aspects of many peoples' lives, but Social Security number and address requirements can limit access for noncitizens in the country. Zolve, a Bengaluru-based fintech, aims to serve folks coming to the U.S. by setting up their financial and communication situations prior to leaving India, providing credit cards, checking accounts, insurance, loans and now mobile plans through its partner bank, Woodhaven, New York-based Community Federal Savings Bank.
"For expats seeking access to financial services or a SIM card in the U.S., the process has traditionally been time-consuming, complicated and overwhelming," said Zolve CEO Raghunandan G in a prepared statement. "However, by enriching our suite of financial products with our own phone plan, we can significantly simplify the lives of the international community and transform the Zolve app into a launch pad for global ambitions."
G added that the phone plan service will also add a new recurring revenue stream for the fintech.
Zolve partnered with San Francisco-based telecom-as-a-service startup Gigs, which contracts with AT&T and T-Mobile in the U.S. and offers an API that allows companies like Zolve to sell voice and data plans to customers. The startup also provides clients with customer data and analytics dashboards. Through Gigs, businesses can act as mobile virtual network operators, or MVNOs, without hiring their own staff or building systems to support the business. MVNOs are companies that provide wireless communication services without owning network infrastructure.
Gigs CEO Hermann Frank said in an interview that he sees a major opportunity for financial institutions to increase their revenue per user and customer loyalty by providing phone plans.
"[Fintech] is one of the most promising verticals on our platform," Frank said. "It's the vertical that we see the most demand from. For us as a company, I believe we can scale this to hundreds of millions in revenue over a relatively short time frame. For the industry, we've now opened the gates so that anyone can easily improve their product offering at a very low cost and within a very short time frame without having to worry about any of the complexities."
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Dylan Lerner, a senior analyst in digital banking at Javelin Strategy & Research, said that extending services that align with a company's target demographic can help stickiness. He added that mobile plans make sense for Zolve's angle toward noncitizens in the U.S.
Lerner added that the key for a fintech is communicating why specific services connect to their value propositions.
"Banks that do this, I don't think it's necessarily because they've always dreamed of being an MVNO," Lerner said. "It's because there's a stickiness factor. 'We're not just your bank. … We want to tie as much as we can to this relationship. That way, we're a more important part of your life.'"
Neobanks that focus on niche customer bases have
"Every niche neobank that has come out in the last few years, they really focus on a particular need or type of segment of a customer," Lerner said. "Once you really identify who your target demographic is, the world is your oyster. You can really choose any direction to go, as long as you're remembering the target customer."
While relatively few companies offer both phone plans and banking products, connecting the two services isn't novel. First National Bank, one of the largest banks in South Africa, has operated its MVNO business, FNB Connect, since 2015. In the U.S., T-Mobile launched its checking and savings accounts, T-Mobile Money, in 2018, in partnership with BMTX Technologies.
The benefits of combining the products for a financial institution are an additional revenue stream and a slimmer likelihood that a customer leaves. Lerner said banks can get deeper in the pocket of their customers and increase loyalty. The value to the customer is the convenience of bundling their necessities in one company, Lerner added. Frank said that with Gigs, companies also don't need to worry about developing software or negotiating contracts with networks.
Frank added that Gigs is also looking to partner with traditional financial institutions to offer phone plans to customers. Lerner said phone plans may not make sense for all brands. Most people who already have phone plans would need compelling reasons to switch to a contract through their bank or fintech. Frank said Gigs has seen strong demand from fintechs and banks in the U.S. and Europe.
Gigs, founded in 2020, raised a $20 million Series A last year. Frank said the startup plans to scale "aggressively" in the next 12 to 18 months to capture market demand. Frank added that the U.S. is Gigs' most important market "by far." Earlier this year, Gigs brought on Rafael Plantier, who previously led Nubank's corporate strategy and new ventures, to head the startup's financial services business. Gigs declined to share revenue or client metrics.
