O2 is hoping to inject some “fresh thinking” into the financial services sector with the launch of its first payment cards.
The telecoms brand believes the diminishing reputation of traditional banking and finance brands has opened the door for non-banking brands to take the sector in a new direction.
The company’s new business O2 Money is partnering with Natwest to create two pre-paid payment cards, which it hopes will help its customers better manage their money. The Cash Manager and Load & Go cards are free to obtain and available to O2 customers.
O2 marketing director Alistair Johnston says: “I think the fact we’re not a banking brand probably helps us in the current economic climate. The industry has been focused on getting people into debt. But the purpose of this product is to help customers better manage their money.”
The move into financial services isn’t simply a way to help O2 customers better manage their cash. It also gives the firm a new direction at a time when the mobile phone market is becoming saturated.
Johnston concedes: “The mobile market is flattening out and arguably going into decline. We don’t want to just accept that so we are looking at new business areas to develop.”
O2 Money aims to establish itself as a serious contender in the financial services sector. “We’re using these products to build loyalty and trust in us as a financial services brand. Once we’ve got that platform we’ll be able to offer services that we can charge for directly,” says Johnston.
The company aims to tie together both the telecoms and financial strands of its business. Johnston says that mobile has the potential to be at the core of banking in the future. O2 piloted payment-via-mobile service O2 Wallet last year and is looking at other similar technologies.
Vanessa Cohen, a partner at brand consultancy Prophet, says both cards could act as a “great acquisition tool” to help O2 gain customers in a sector where people are quick to change suppliers when their mobile contract ends.
She adds that on a corporate level, it shows O2 understands what customers need in the current economic climate.
But she does question whether the O2 brand has enough gravitas to be a serious financial services business.”It’s a relatively young brand. If O2 was to offer financial products, it would still have an issue of not being an institution like Tesco or Marks & Spencer, which have both entered this market.”
Nevertheless, Cohen thinks O2’s initiative is likely to herald many more non-bank brands moving into the finance area. Unless traditional banks can quickly regain trust, she suggests that “consumers will jump on them”; which is exactly the attitude that Johnston and O2 are banking on.