Smartphone Data Could Be The New Airmiles If O2 Banking Has Its Way

With interest rates still dire, carrier Telefonica is reportedly hoping the lure of free smartphone data will tempt subscribers to bank with them instead. O2 Germany, the company's German arm, is apparently preparing to launch a service called "O2 Banking"; according to Bloomberg's sources, next week subscribers will not only have the option of relying on the network for their connectivity, but for their financial needs too.

The proposal would see subscribers issued a MasterCard, with spending rewarded by extra mobile data above and beyond what is regularly included in the user's plan. More shopping would equate to more accrued data.

At this stage it's unclear exactly what the terms of the deal might be, and how much German users would have to spend in order to receive, say, an extra gigabyte per month.

Credit card companies have long tried to encourage both loyalty and greater use of their financial services by offering perks, though mobile data is a new one. Though actual cash back in return for spending is one option, more common are things like airline miles or some type of points which can be exchanged for discounts, travel, or products.

Arguably, the time is ripe for mobile data to take its place, however. With the rise of smartphones – and the growing popularity of data-hungry activities like music and video streaming, along with games like Pokemon GO – making sure there's enough gigabytes on your plan has become a real headache for many users.

Given those priorities – and the preference for a relatively short-term delay for a reward, as opposed to saving up the many thousands of miles for a "free" holiday – O2 Banking may very well prove more popular with young people, assuming of course they can pass the credit check that's likely needed to get the card in the first place.

For O2 and Telefonica, of course, it's another way to not only cement loyalty among subscribers but to try to shift the role of the carrier from merely the "dumb pipe" through which others deliver services.

In the US, meanwhile, we've seen T-Mobile attempt to broaden its appeal and stickiness with subscribers with promotions such as "T-Mobile Tuesdays", which has recently included bonuses like free data to use playing Pokemon GO.

SOURCE Bloomberg