Neobanks Enter the Telecom Arena
In a strategic move to diversify their offerings, neobanks like Revolut and N26 are venturing into the telecommunications sector, introducing mobile services that blend financial and connectivity solutions. At first instance, this move could enhance customer engagement and open new revenue streams. How likely is it to be successful, though, when the offerings are so similar?
Revolut's Mobile Plans
Revolut, the leading neobank, has unveiled its "Mobile Plans," offering unlimited calls, texts, domestic data, and a 20GB roaming allowance across Europe and the U.S. without fixed contract commitments. Customers can activate these plans directly through the Revolut app by obtaining a new number or porting their existing one. This initiative follows the success of Revolut's eSIM product, which has become its most popular non-banking offering.
N26's SIM Offering
Similarly, the German fintech N26 has launched "N26 SIM," providing three data plans (10GB, 30GB, and 100GB) priced at €13.99, €19.99, and €34.99 per month. These plans include unlimited national calls and texts and free EU roaming and are exclusively available via eSIMs activated through the N26 app. The service operates on Vodafone Germany's 5G network and is currently available to personal account holders in Germany.
The Appeal of Telecom Integration
Following the second wave of fintech, many neobanks and digital banking offers vanished from the European market due to similar value propositions. Revolut and N26 are among the few that remained and are already competing fiercely across service verticals and geographies. The aim is to differentiate the product; therefore, the competition is fierce.
Why did telecom services become attractive all of a sudden?
By integrating mobile services, neobanks like Revolut and N26 aim to increase user engagement and loyalty. Offering telecommunications alongside banking services creates a more comprehensive ecosystem, encouraging customers to consolidate their financial and connectivity needs within a single platform.
Entering the telecom sector allows neobanks to tap into new revenue sources beyond traditional banking. This diversification is particularly appealing in the competitive fintech landscape, where customer acquisition and retention are paramount.
The telecommunications market is highly competitive, with established players holding significant market share. Neobanks must differentiate their offerings and provide superior value to attract customers from incumbent providers.
Additionally, managing mobile services introduces new operational challenges, including customer support for telecom issues and compliance with telecommunications regulations. Neobanks must have the infrastructure and expertise to handle these complexities effectively.
Past Endeavors: Lessons Learned
Revolut and N26 are not the first companies to explore the banking-telecom synergies. In the past, U.S.-based neobank Oxygen initially targeted freelancers and small businesses but later shifted focus towards health services. This pivot underscores the importance of adaptability and the need to reassess strategies in response to market dynamics.
The European telecom provider Telefónica O2 made a similar attempt with its “o2-Banking” offer. In 2016, Telefonica partnered with Fidor Bank to launch “O2 Banking” in Germany. On paper, it made sense: Fidor’s BaaS capabilities plus O2’s 42 million mobile subscribers. Yet by mid-2020, the contract was terminated. Key failure factors include:
Operational instability: Repeated technical outages, frozen accounts, delayed credit postings, eroded trust, and forced O2 to seek a new partner.
Misaligned incentives: Fidor reportedly lost €41 million in 2018; the bank’s priorities (recouping losses) clashed with Telefonica’s focus on customer experience and scale.
Weak engagement mechanics: Beyond a modest bonus of O2 minutes for card use, there was no compelling, integrated value proposition to keep customers in both ecosystems.
A telco‑bank bundle must deliver rock-solid reliability and tightly aligned economic incentives, or the weakest link will break the partnership. The existing banking-telecom partnerships weren’t able to capture this essence.
Is the banking-telecom relationship doomed to fail, though? Not really. Let’s take a look at the successful models.
Successful models: What worked elsewhere
Arguably the gold standard, Kenyan M‑Pesa combined airtime-backed e-money, a dense agent network, and micro‑loans. Their secret sauce includes:
Trust through ubiquity: Safaricom’s 90% market share and physical agents gave customers confidence to adopt mobile money.
Simplicity: Users cashed in/out via agents and sent money by entering phone numbers—no bank account was needed.
Ecosystem enablers: Bill payments, merchant acceptance, and credit scoring tied to mobile usage created a virtuous growth cycle.
Another successful example, Orange, leveraged its brand and merchant partnerships to deliver wallet, savings, and remittances across West and Central Africa. It was succeeded by Leveraging existing telco infrastructure and negotiating e-money licenses early, standardizing operations across several countries.
What Revolut & N26 need to nail to succeed with the telecom offer
The telecommunications market is highly competitive, with established players holding significant market share. Neobanks must differentiate their offerings and provide superior value to attract customers from incumbent providers.
Considering the successful and not-so-successful examples above, Revolut and N26 will need to deliver the following points for product longevity:
Zero‑tolerance for telecom or banking outages. Co-owned incident‑response processes between the bank and the telco.
Revenue‑share or subscriber‑acquisition incentives must reward both sides for true customer lifetime value, beyond one-off SIM sales.
Bundles must go beyond “SIM + data.” Think: in-app airtime top-ups using bank balance, loyalty points convertible into fee waivers, travel-related use cases, or data-backed micro-credit offers.
Even within the EU, roaming rules and e-money licensing nuances matter. Early dialogue with the regulators and potentially white‑label partnerships with local banks will smooth the rollout.
Acquisition via telco channels (SIM shops, app install flows) should seamlessly onboard banking, with one-click KYC and immediate transactional capabilities.
Granular privacy controls over telecom data usage and sharing.
Consent-based personalization to tailor offerings.
Reduced FX fees or additional data when using mobile banking abroad, considering the share of “nomad” and expat clients in the portfolio.
Pros and cons of neobank telecom offers
Pros
Cross-sell & stickiness: Customers who use both services are harder to churn.
Lower acquisition costs: Telco distribution and app‑install channels can slash CAC for banking.
Data synergies: Usage patterns (top-up frequency, roaming) can feed more precise credit and rewards models.
Cons
Operational complexity: Two regulated industries, two support organizations, two tech stacks.
Regulatory burden: Telecom and financial regulations often diverge, multiplying compliance costs.
Brand confusion: Without clear joint branding, customers may not fully understand the benefits or support channels.
Telco‑bank bundles have real potential, considering examples such as M‑Pesa and Orange Money. Still, history warns that misalignment, operational fragility, and lack of a unified value story can doom them.
Integrating telecommunications services by neobanks like Revolut and N26 represents a bold step towards creating comprehensive digital ecosystems. While this strategy offers enhanced customer engagement and diversified revenue opportunities, it also presents challenges that require careful navigation. Success in this endeavor will depend on offering compelling value propositions, managing operational complexities, and adapting to the competitive landscape.
For Revolut and N26, success will hinge on engineering bullet‑proof reliability, crafting genuinely integrated offerings, and navigating the regulatory and partner landscape with surgical precision. The success of telecom integrations will hinge on more than price competitiveness or distribution reach.
Only by learning from past failures and emulating the best of emerging‑market champions can European neobanks turn mobile contracts into a sustainable competitive advantage.
