Rogers Communications (News 
- Alert) has applied to become a bank under the Canadian federal Bank Act. If approved, the proposed "Rogers Bank" will focus mainly on credit, payment and charge card services.
"We have no plans to become a full-service deposit-taking financial institution," Rogers Public Affairs Manager Carly Suppa said. "The license, if granted, would give us the flexibility to pursue a niche credit card opportunity to our customers should this make sense at a future date."
The federal Bank Act license would allow Rogers to create an in-house bank, which is the first step to offering retail credit cards in Canada. The move is more common among retailers such as Wal-Mart, which applied last year for bank status so that it could offer credit cards, but is rare for a phone company.
That said, credit cards present a distinct opportunity for Rogers to expand its reach. The media, cable and wireless giant, which also owns the Toronto Blue Jays, has direct relationships with millions of customers, including many who pay bills using credit or direct-deposit accounts.
Analysts say the company can build a card business by leveraging those relationships to market its brand of cards, especially by reaching out to customers who have good credit standing in its database. Rogers to become a bank
Rogers could also compete with credit card distributors by providing perks related to its products, such as discounts, similar to the loyalty rewards cards that many banks offer.
The move by Rogers is highly significant, as it illustrates an important point about where large tier-one providers must look for revenue growth. For an organization such as Rogers, which might book $12 billion in 2011 revenue, even interesting new lines of business that produce scores of millions to hundreds of millions worth of new revenue are too small to "move the needle" overall.
The move is not directly and immediately related to potential moves by Rogers into the mobile payments business, but obviously, as a bank, Rogers will have new incentives to do so. In fact, it will make much more sense for Rogers to consider such a move, either to expand or protect its banking operations and revenue streams.
Observers say Rogers appears to be moving along a path created by retailers such as Canadian Tire Corp. and Walmart Canada in which shopping relationships are expanded into the financial services business. Precedents in Canada
Others suggested the move represents a significant step toward establishing Rogers in the nascent business of mobile payments.
Once a credit-card base is established, probably targeting Rogers' 9.1 million wireless subscribers, it is perhaps a small step to wed the financial service to a Rogers smart phone.
Rogers move could be prelude to mobile payments
