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Telco O2 launch financial services

In a pretty important announcement today, O2 has opened a card-based financial service for their UK mobile subscribers. These are mobile Visa debit cards, powered by NatWest banking.

O2 is one of the UK's largest mobile carriers, with over 23 million subscribers, and the service will be available from August 2009.  The O2 Visa cards will be available for free to O2 customers and will be free to use anywhere in the UK,
including at ATMs.

Two accounts are being launched: Cash Manager for
older customers and Load & Go for the younger. 
The products are based upon Visa prepaid debit cards and can be used in the same way such that they can be loaded with value online or in stores, and used in any stores that take Visa debit cards. Each time a payment is made with the card, customers receive an SMS
text alert with their account balance.

Ronan Dunne, O2’s UK chief executive, said that the cards will be free
from fees to help people better manage their spending, because they
would not permit the users to go overdrawn and because customers will always know their balance.

Mr Dunne said: “The mobile phone and the wallet are starting to converge. We want
to create a bridgehead into this market.”

How right he is.

The launch builds upon O2's successful trial of mobile contactless
payments they ran as a joint venture earlier this year with Oyster,
Visa and Barclaycard.  This was deemed a major success, and so it is
interesting that their banking partner is not Barclays or Barclaycard
but NatWest, a division of Royal Bank of Scotland.

This could be because RBS actually placed a focus in this market, and is trying to be an MVBO – Mobile Virtual Banking Operator – in partnership with any telco.

As a result, I immediately pinged my mate Roy Vella at RBS, a regular speaker at the FSClub, a note to ask what was going on, and here's his response:

Why O2?

We share a customer-centric view of the world, a mutual respect for our distinct, complementary strengths and a joint taste for market-leading innovation around mobile financial services.

Will you do the same with Vodafone and others?

We only announce and discuss products that are imminently launching (within weeks, not months). We leave it to others to make noise around hypothetical consumer offerings that may or may not eventually materialise.

What do you see as the potential?

Clearly the convergence of financial services with the mobile handset is inevitable. As such, there are a variety of opportunities ahead to deepen our offerings to more and better services for our customers. But again, I'd rather discuss the here and now instead of the there and then…

Will this be taken across RBS Group, or is it just NatWest?

This launch is "Powered by NatWest" for O2 Money in the UK. We will announce extensions into other geographies as they occur.

Do I get a free phone if I open a NatWest bank account now?

See our strategic partner O2 about your telecommunication needs.

As the main UK distributor of iPhones, O2 has just sealed the deal for me then.

About Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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