A few weeks ago, the New York Times published a story on T-Mobile that many bankers probably missed, but definitely should read.
The piece, authored by Farhad Manjoo and pointedly titled "T-Mobile Turns Industry on Its Ear", details how the wireless carrier regrouped following the government's blockage of its proposed merger with AT&T in 2011. Manjoo provides all the details, but essentially, the company – which, at the time, was hemorrhaging customers – adopted a consumer-friendly, flexible pricing structure that, among other things, eliminated contract lock-ins and unbundled phone and service purchases.
Careful readers will note that this strategy, which has been coupled with an aggressive (and ongoing) marketing campaign, has yet to make T-Mobile any money – and yes, from a bottom-line standpoint, its recent fourth-quarter results were abysmal. But focusing on the dollars here misses the point. The carrier added 800,000 "prized customers" in the fourth quarter alone and a total of 4.4 million new subscribers over the course of the year.
Moreover, the associated customer attrition at competitors is forcing them to change their long-held pricing structures. Per Manjoo:
T-Mobile's plans were so blindingly sensible that its competitors have been forced to respond.
In December, AT&T updated its plans to include a contract-free option. In February, Verizon offered a new set of plans that include similar options, though Verizon's plans are far more costly and less flexible. The larger carriers have also copied other T-Mobile ideas. After T-Mobile introduced its early upgrade program, Jump, which lets you pay an optional fee for the privilege of getting a new phone more frequently than every two years, AT&T, Verizon and Sprint followed suit.
All of this should be important to financial firms, since T-Mobile launched a phone-based checking service aimed at the underbanked in January. Bankers may want to keep their fingers crossed that the company, in its own quest for revenue, doesn't go on to target all demographics with a wider array of financial services.