Before GameStop became a memestock (what even is 2021) – it was the subject of another popular meme. The First National Bank of GameStop.
This got me thinking. In the UK, retail banking is (mostly) free. Rather than pay interest to depositors, banks give away free ATM withdrawls, free Direct Debits, free transfers to other accounts.
Some premium accounts cost money. In return, the customer gets “free” rewards. Travel insurance, car breakdown cover, foreign exchange discounts.
That’s all well and good. But the interesting thing is that those “free” rewards aren’t cost-free to the bank. Sure, they buy the breakdown cover wholesale which makes it cheaper – but there is a monetary cost to it.
Traditional business relies on buying at wholesale prices and selling at retail prices. If you can find something non-tangible which costs you nothing – but has value to customers – then you can literally print yourself money.
Let’s take – for example – Xbox. What if Microsoft ran Xbox Bank? Sure, it could give out a branded debit card – like Monzo’s iconic Coral Pink card – but that’s not particularly interesting.
Here’s my (hare-brained) proposition for Xbox Bank.
- Monthly rewards of a free Fortnite skin.
- For every Direct Debit you set up, claim a free Minecraft map.
- Pay in a monthly salary and receive that as GTA V currency.
- Sign a friend up using this referral code and get a month’s free Xbox live.
And so on. This model has three distinct advantages – for customers and the bank.
- Turns pain into joy. That’s the goal of a lot of start-ups. Paying bills is BORING and sometimes scary. Rather than ignoring the gas bill, it’s now a delightful experience which directly rewards you.
- Useful rewards. Travel insurance is rarely used (*sobs in covid*). A customer derives real, ongoing value from in-game items.
- Builds a moat. Are you likely to switch to PlayStation if all your rewards are with Xbox? There’s even more value in exclusive rewards.
Microsoft could hollow out a nice little niche here. Plenty of young people don’t actively choose a bank – they go with whatever their parents have. This could be a great way for MS to get customers from outside the traditional customer-base of a large bank.
Once established, would existing banking customers move over? Well, if all you get from your current provider is a crappy app and a cinema discount – why wouldn’t you move to something which gives you a better Axe in whatever MMO you like?
Now, there are a billion-and-one reasons why Microsoft doesn’t want to get into retail banking. And, to be clear, I wouldn’t trust them not to ban my gaming account and lock me out of my funds! But digital goods and services are big business. With almost zero cost to providers, and high value to users, they could be an effective way to attract and lock-in customers.
In any case, it’s a lot more compelling than collectable china piggy banks!