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Honor Roll: This Week's Top Banking Blogs (Jan. 31-Feb. 6)

Posted on February 05, 2010

Our favorite banking technology-related blog posts from around the Web (January 31-February 6, 2010):

How Big Is Mobile Banking's App-etite?

Celent's Red Gillen, who I just interviewed for a story on mobile payments, describes the confusing work of mobile banking application development. "Prioritizing, developing, maintaining and owning apps for a myriad of operating systems and mobile devices has got to be daunting and expensive," he writes.
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ATMs, Bill Pay, Overpayment of Credit Cards, Money Transfers…How Crooks Get the Money OUT

"Because there are a finite number of ways to actually get the money out of a bank, card issuer, merchant, telco or even healthcare provider, a focus on channels is the way to bolster safety," Javelin Strategy & Research's James Van Dyke writes in this post about cybercrime.
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A Good Reason To Make It Easy For Customers

Forrester's customer experience guru Bruce Temkin discusses the concept of "cognitive fluency," a measure of how easy it is to think about something. "While the overall observation about cognitive fluency may not seem like rocket science, the research findings about how it alters people's perceptions and behaviors are very useful," he writes.

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Honor Roll: This Week's Top Banking Blogs (Jan. 17-23)

Posted on January 22, 2010

Our favorite banking technology-related blog posts from around the Web (January 17-23, 2010):

Easy Does It

Red Gillen writes on the Celent Banking Blog that ease of use is the key issue when it comes to the viability of mobile payments. "The first and perhaps most meaningful illustration of this point has been the phenomenon of text-based payments for the earthquake relief efforts in Haiti," he writes.
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Who Is Really Dividing the Banking Industry?

Independent Community Bankers of America (ICBA) president Camden R. Fine expresses his frustration regarding his group's inability to speak out on behalf of its constituents without facing accusations of being divisive. "In a game as old as Washington, the big banks and their hired guns stack the deck, then turn around and accuse us of playing unfairly," Fine laments.
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A Day Without Payment Cards

A coffee shop's downed Internet connect (and subsequent inability to accept prepaid cards or electronically process credit card transactions) recently gave Javelin's James Van Dyke a brief glimpse into a horrifying world without payment cards. "If we eliminated prepaid and credit cards, everything would change for merchants and retail customers. I've all but eliminated checks from my daily existence, but until I heard the now-unfamiliar sound of change jingling in my pocket I hadn't realized how infrequently I use cash," he writes.
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Credit Unions and SunTrust Lead Banks in Customer Experience

Pointing to Forrester's recently released 2010 Customer Experience Index rankings, Bruce Temkin reports that, while banks remain in the middle of the pack compared to other industries, they have dropped off significantly since 2008 when it comes to customer experience ratings.

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Mobile Banking and Payments Feed Customer Experience Lab

Posted on January 14, 2010

By Bill Bradway, Bradway Research LLC

The recurring headlines touting mobile banking and more recently, mobile payments, reinforce my opinion that technology-based innovation in financial services is often ahead of the business-based needs the technology solutions address. Mobile banking over the past 10 years has been a poster child for this phenomenon. No doubt the interest in mobile banking today by bankers is rising and far stronger than 10 years ago and several leading institutions have achieved a meaningful retail customer adoption of their mobile banking offer, led by Bank of America in the U.S. But that misses the point of this column. Last month I noted, “As the banking industry begins its recovery from the Great Recession, eyes and minds are shifting their focus back to identifying the most promising bank tech innovations for the next few years.” Are mobile banking and payments among the most promising innovations, capable of disrupting the retail banking market? Or, will they drive more bankers crazy, in both business and IT, chasing ever elusive expectations?

What should U.S. bank and credit union execs think about when they decide to pursue investments in mobile banking and payments? To no one’s surprise FinTech mobile banking solutions were among the ones that received lots of attention at Finovate 2009 (New York) and BAI’s Retail Delivery conference (Boston) last fall. There is no doubt that effective innovation can attract customers – witness B of A’s rapid growth in mobile banking and USAA FSB’s mobile innovations.

I consider the introduction of the iPhone as a “significant” change to the mobile platform that has become a game changer. Other manufacturers have followed with their competing products. This multi-channel, multi-function handheld platform is the key to transforming the mobile platform/channel into a meaningful venue for retail banking and payment capabilities.

The big four wireless providers (Verizon, AT&T, Sprint, T-Mobile USA) serve over 200 million mobile users in the US. Over 20% of mobile users now have a 3G device (e.g., Apple iPhone). Based on Bank of America’s mobile banking adoption curve (3.5 million users as of November 2009), I estimate over 9 million U.S. consumers (or 4% of all US mobile customers) are actively using their mobile phones for banking related transactions and inquiries. The NPD Group, a research firm, found that at least 20% of mobile users use their phones as an all-in-one multimedia device for phone, music, videos, Web surfing, and other activities. My view is that mobile banking adoption is more like a rapidly expanding customer experience R & D lab. The hardest part of R & D is figuring out the projected “real” benefits for the institutions. Is it cost savings or more revenue? Does it contribute to organic growth (customer acquisition), reduce customer attrition, or both?

About a year ago, my analysis of mobile banking started with the following premise, which is still valid today. “New technologies can stimulate the marketplace by enhancing existing solutions or introducing disruptive capabilities that can dramatically expand market opportunities. Evaluating this expansion potential requires answers – is it sizzle or steak? Or, should the financial institutions ask “so what?” … banks have to constantly evaluate their customer (segment) requirements, their channel delivery needs and existing investments, and their capacity to fund new technology…”

Some institutions will pursue mobile banking before their bank or credit union customer base is ready to adopt mobile banking in a meaningful way. Other banks and credit unions, particularly those with lots of Gen Y and younger Gen X customers, will gain from the mobile experience. For the next few years, my sense is that bankers will not go crazy over mobile banking. By 2014, their success stories will solidify the business case(s)/cost(s) for adding mobile banking and payments.

Bill Bradway, founder and managing director of Bradway Research LLC, analyzes the business strategies and IT investments of U.S. banks and credit unions.

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Twitter Buzz Overwhelmingly Positive for Google's New Phone

Posted on January 07, 2010

To gauge the popularity of the Nexus One smart phone Google announced on Tuesday, Attensity has applied its sentiment analysis technology to the Twitterverse. The software company ran 15,000 Tweets that mentioned the device through its Voice of the Customer analysis software, which detects and aggregates positive and negative verbiage to draw conclusions about what a group of people feel about a subject.

While very few Twitterers characterized Google's effort as an iPhone killer, more than half said they like it and around 80% said they intend to buy a Nexus One (and more than 100 of those potential purchasers had more than 1,000 followers on Twitter). Among the features they like, more than 30% tweeted enthusiastically about Google's new Android 2.1 open-source mobile operating system; around 25% said they like the new phone's screen. Among those that made negative mentions of the Nexus One, just under 25% cited its applications (or lack thereof, since it is so new that few developers have written programs for it yet), its keyboard (which like the iPhone is a virtual, touch screen keyboard that suggests words as you type) or the Android OS (which to Apple afficionados may be unappealing).

The Nexus One has a touch screen, weighs less than five ounces and has a five megapixel camera. It will sell for $529.99 unlocked, or $179.99 with a two-year T-Mobile contract.

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Honor Roll: This Week's Top Bank Blogs (Dec. 6-12)

Posted on December 11, 2009

Our favorite banking technology-related blog posts from around the Web (December 6-12, 2009):

Mobile RDC: Getting to Yes

Recent research indicates that risk and/or compliance concerns are the biggest barriers to adoption for bank's mobile RDC projects. "All the pre-integration in the world won't address the lingering systemic risk paranoia around RDC," writes Celent's Bob Meara.
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Why Critics are Leery of Online Statements

On the Javelin Strategy & Research blog, Mark Schwanhausser discusses a soon-to-be-released report about paperless billing statements. "It's a hot topic because the recession and industry meltdown have forced banks and billers to look hard at every conceivable way to cut unnecessary costs, and every paper statement they drop in the post box is bleeding them about $1," he writes.
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Will Cloud Computing evolve the role of CIO?

"As the industry is moving into an age of choice in computing platforms, the role of Information Technology as a business unit may be changing as well," suggests AAB (that's as close to an author name that I can find), drawing on a recent presentation from OMG's (Object Management Group) Business Ecology Initiative.
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Consumers Expect Poor Customer Service

If recent research for Forrester is any indication, it looks consumers expect the worst (or, at least, the not very good) when it comes to customer service. "The research, which was based on surveying more than 4,200 US consumers, looked at consumer expectations for getting an issue resolved in 10 different areas (apparel, bank account, hotel, auto insurance policy, TV service, credit card, wireless phone plan, Internet service, computer, and health insurance policy)," reports Forrester's Bruce Temkin.

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Honor Roll: This Week's Top Bank Blogs (Oct. 25-31)

Posted on October 30, 2009

Our favorite banking technology-related blog posts from around the Web (October 25-31, 2009):

Scoping New Territory: USAA Indicates Decision to Market Its Mobile Banking Platform

Javelin Strategy & Research reports that USAA, one of the first banks to develop a mobile RDC capability for the iPhone, is "preparing to enter the mobile fray as a software vendor." Javelin's Beth Robertson wonders what this means for other vendors currently in the space and whether banks will be comfortable buying mobile services from another bank.
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BBVA Compass is on the Right Track with Overdraft Fees

BBVA Compass has joined a growing number of large US banks that have announced policy changes, writes Celent's Bob Meara. Because many of those changes relate to transparency and fee moderation, US Banks may start to regain public trust. "If more broadly adopted, they may also stave off regulation working its way through congress," Meara suggests.
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Exterminate Bad Experiences RightNow

Forrester's Bruce Temkin investigates RightNow's new corporate mantra: ridding the world of bad experiences. "I've seen many vendors create missions like this; announcing audacious statements about how they want to be perceived. Most fail miserably. But RightNow's announcement is different from most," Temkin writes.
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Accuracy – How Come No One Talks About It?

Initiate's Rick Clement's wonders why the accuracy of master data doesn't seem to be as valued as performance or scalability. "Without accurate master data the business processes that depend on those data can be inefficient, ineffective, and costly or increase business risk," he writes.

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Honor Roll: This Week's Top Bank Blogs (Sept. 13-19)

Posted on September 18, 2009

Our favorite banking technology-related blog posts from around the Web (September 13-19, 2009):

USAA's Mobile App Showcases Innovation

Forrester research VP and principal analyst Bruce Temkin gives us his take on USAA's new mobile RDC iPhone app, a story we've covered at BS&T. Be sure to check out the comments section, which provides a real example of how financial services organizations are seeking to directly engage their customers through blogs and social networks.
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Intuit Looks To Mix Some Mint Into Online Banking

Javelin's Mark Schwanhausser provides some perspective on Intuit's plans to acquire Mint. "The biggest impact from this deal will be felt in the market for personal finance management tools offered by financial institutions," he writes.
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Prediction Meets the People Problem

Intelligent Enterprise In Context blogger Doug Henschen follows up on his recent feature story, "4 Technologies that Are Reshaping Business Intelligence." In the post, he writes, "Lots of vendors now offer (or are scrambling to offer) analytic software, but the question is, how much expertise will you need to make productive use of the software?"

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Mobey Forum Gives Mobile Financial Services Another Boost

Posted on June 18, 2008

It wasn't too long ago that I wrote a blog about a new mobile financial services standards working group that was being established by the Financial Services Technology Consortium (FSTC). The group hopes to address the interoperability issues facing the industry to help adoption rates. Now, over the Atlantic in Finland, the Mobey Forum, a nonprofit financial industry forum that helps facilitate mobile financial services for banks, issued a whitepaper which, it says, lays the groundwork for global mobile financial services (MFS).

Specifically, the paper looks at the security element on the handset. It outlines guidelines for establishing mobile financial services "ecosystems" that share a critical security component in the handset itself, such as the SIM card. According to the group, the paper addresses the needs not just of the banks, but of other players in the mobile space as well—something that is very crucial to making mobile live up to its potential.

According to a release:
"A range of 'shared security' MFS business models ranging from co-ownership of the secure element to renting space, are presented. The research document goes on to analyze the critical issue of enrolment in a multi-application environment. Mobey Forum's analysis targets the creation of mass-market friendly business models that are able to provide transparent links between a bank and customers—irrespective of the particular mobile networks users subscribe to. The role of the Trusted Service Manager is widely agreed by the industry to be a crucial enabler for facilitating MFS markets."

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Hope for Mobile Payments Standards

Posted on June 04, 2008

It looks like the mobile channel just found a standards champion—the Financial Services Technology Consortium (FSTC). The organization announced it is assembling a team of industry experts to help develop best practices and standards for mobile payments.

This is a great step forward for the industry, as far as I’m concerned. One of the main roadblocks to the faster evolution and adoption of mobile payments in this country has been the issue of standards. With so many players involved—banks, card associations, payments processors, mobile phone carriers, merchants, etc.—experts have said that finding a single operating model by which to conduct these transactions will be very difficult. After all, they all want to do things their way and they all want a piece of the customers and their money.

The FSTC has stepped up to the plate in a way that will hopefully help along the process. According to the group, the initiative will examine the various technology models supporting mobile payments today and make recommendations on an approach that would facilitate an interoperable mobile payments infrastructure in the future.
It appears the FSTC’s effort has a good following. The group says that over 25 organizations, including banks, wireless carriers and technology providers, are participating and will provide a broad view of the current mobile environment and practices. The initiative is sponsored by The Federal Reserve Bank of Boston and The Clearing House Payments Co., as well as the American Bankers Association, BITS Financial Services Roundtable, NACHA and PaymentsNation. The FSTC encourages other organizations to join the initiative.
The FSTC hopes the fruits of its labors will yield a model that provides interoperability to the marketplace to enable true “any time, anywhere” financial transactions from any bank, phone and wireless carrier. The goal is to recommend a “preferred” technology standard by the end of the year.

If the FSTC is able to hammer something out, this could prove to be a huge coup for mobile payments in the U.S. Of course, things remain to be seen. Just how the FSTC will get all these entities to play nicely together will be interesting. As I said earlier, everyone wants to own the customer. And when it comes to mobile payments, we’re talking about a lot more fee revenue being at stake than in simple mobile banking.

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FIs Continue to Dial 'M' for Mobile Banking

Posted on January 10, 2008

Throughout 2007 (and even into 2008—see our Jan. issue), BS&T talked about mobile banking and mobile payments until we were blue in the face. From the way things are shaping up, it doesn't look like our mobile mania will abate any time soon. Deals continue to be inked and banks are slowly starting the process of getting the word out to customers about what exactly mobile financial services are. Mind you, I speak only of the U.S. market, which is still a mobile financial services novice when compared with the rest of the world.

Just this week, for example, mobile banking technology company Monitise Americas, formed in a joint venture with U.K.-based Monitise and payments services and solutions provider Metavante, announced that Metavante's NYCE Payments Network signed 10 banks to the companies' joint mobile financial services offering: California Business Bank, First National Bank of LaGrange, Gold Canyon Bank, INTRUST Bank, New Century Bank, Michigan Schools and Government Credit Union, PrimeSouth Bank, PyraMax Bank, Seaside National Bank & Trust, and Summit Bank. Some of these financial institutions might not be national household names, but the fact that so many are willing to make the leap onto this new channel is telling. Could it be a "me too" effect? Perhaps. But no one can deny that the number of banks offering some kind of mobile banking service to customers is beginning to take off.

What I found interesting is the flurry of attention by the mainstream press around Wachovia offering mobile banking via Verizon, courtesy of its partnership with Firethorn. Firethorn acts as a conduit between the banks and the cell phone networks and helps to enable mobile banking by convincing the carriers to preload the mobile banking application on their phones. The concept is that by preloading the app, adoption by consumers will be easier because there isn't much effort required on their parts to activate the service. Wachovia threw its hat in the m-banking ring in the beginning of 2007. The Verizon deal is just a way for the bank to expand its offering. After all, ease of use will be the key to mobile banking adoption in the U.S.

All this seems like great news, but let's not get ahead of ourselves. There are about 8,000 banks in America, four major cell phone carriers that jealously guard their networks and countless mobile solutions providers. We've still got a ways to go, so I for one am not expecting anything too dramatic in m-banking adoption—not in 2008, at least.

What do you think? How much longer must we wait before m-banking becomes commonplace among consumers? What will be the tipping point for m-banking adoption?

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RDS SPECIAL: U.S. Banks Should Learn About Mobile from International Counterparts

Posted on November 14, 2007

There's no doubt that the U.S. is blessed technologically. We've nurtured the seeds of innovation on so many levels. But then I talk to people from other countries about what they're doing with mobile phones and I feel like we're a bunch of cavemen here!

I exaggerate, of course, but we all know just how far behind the rest of the world (developed and otherwise) we are in terms of the functionality of our cell phones. The reasons vary, from the almost Soviet-like rules of use and exclusivity of our cell phone carriers to the fact that we just didn't need mobile phones as much as the rest of the world because our landline infrastructure worked.

Yesterday, I spoke with Len Pienaar, CEO of mobile and transact solutions with First National Bank. This FI is based in Johannesburg, South Africa—a place where the landline infrastructure has some gaps. But Pienaar and First National knew that mobile was the channel that would help it expand its services to customers both new and old.

"South Africa might not have a very big population, but it is one of the most sophisticated countries in terms of banking technology, such as real time transactions and full channel integration," explained Pienaar. "But we're in a market where a huge part of the population can't access the Internet. So we experienced a good deal of pressure from the government and our shareholders to make banking more inclusive. Mobile was really our only channel of choice. Everyone has a mobile phone in South Africa."

He said the current iteration of mobile banking is the bank's third attempt at the service. The bank started off with mobile banking based on WAP technology where a Web page was basically squeezed onto the small display of a cell phone. The results weren't quite as expected. However, when the bank offered mobile banking via SMS text messaging, things took off.

First National uses technology from Redwood City, Calif.-based Clickatell to send alerts and messages to customers about credits and debits, suspicious activity, and allow customers to make balance inquiries, and even lets customers top off prepaid minutes for their phones or buy vouchers for their utilities bills. Prepaid is very big in South Africa, said Pienaar, and is also one of the most popular functionalities in the bank's mobile service. These are the main features that consumers tend to desire of mobile banking, he said. Banks tend to lose sight of this fact when they roll out their mobile banking initiatives, making them too cumbersome as they try to do everything. According to Pienaar, "Fraud syndicates leave our customers alone" because of the huge penetration in mobile banking at First National because of the alerts and the frequency with which customers check their account information on their phones.

The bank averages over 100 million mobile banking transactions a month. "You open an account with us and you leave with mobile banking. It's expected now," he said. The biggest challenge is getting people to choose and remember their PINs, he jokes.

The SMS banking was launched in 2005. Today, however, Pienaar said the bank's mobile business is being driven by the Unstructured Supplementary Service Data (USSD) protocol, which runs on GSM phones. USSD is similar to SMS, but unlike SMS, USSD transactions occur during the session only. With SMS, messages can be sent to a mobile phone and stored for several days if the phone is not activated or within range.

Of course, First National is just one example of what banks outside the U.S. are doing with their mobile initiatives. South Africa is certainly a market with very unique conditions that made it perfect for exploiting the mobile channel. How things evolve in this country will surely vary but we can learn from First National's example. Keep it simple. People use texting to a great degree in this country. And although people may have web-enabled phones, they might not know it or not know how to use it. Text is probably the most straightforward way at this point in time to launch a mobile banking initiative.

Things still have time to evolve in the U.S. so it will be interesting to see how it all turns out. But according to Pienaar, "I can't see mass adoption of mobile banking in the U.S. with WAP. So I think we'll see the same trend with text in the U.S. as we did in South Africa."

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Western Union to Offer Mobile Remittance Service

Posted on November 06, 2007

Nontraditional financial services providers just got another leg up on banks in the remittance market with a new mobile phone service. GSM Association (GSMA), a global trade association representing more than 700 GSM mobile phone operators, and Western Union Company announced late last month an agreement to facilitate the development of cross-border mobile money transfer services

The framework will allow mobile phone companies to offer their customers a service to send and receive low-denomination, high-frequency money transfers using their mobile phones. The first commercial services that make use of the framework could roll out beginning in the second quarter of 2008.

Users of the system will not need bank accounts, giving the unbanked another way around inclusion in the traditional financial system. However, this may spur faster adoption of mobile banking from existing bank customers.

Thirty-five GSMA operators with more than 800 million customers in more than 100 countries are participating in the GSMA Mobile Money Transfer program.

"Remittances are playing a vital role in the social and economic development of India and many other developing countries," said Mr. Mittal. "This initiative will bring down the cost of lower-value and high-frequency mobile remittances considerably and also enable smaller amounts to be transferred in a fast and secure fashion, thereby benefiting millions of people in the developing world."

“Multichannel capabilities are the name of the game in money transfers. As the largest money transmitter in the world by number of agent locations, Western Union is entering the mobile remittance space in a strong position,” says Aite Group research director Gwenn Bezard. “It has already proven there are big bucks in emerging channels, such as the Internet – a $100 million business for Western Union. Even if mobile remittance remains a niche offer for a long time, Western Union has enough scale in its business and enough brand recognition to make it pay off rapidly, certainly faster than any other would-be mobile remittance provider.”

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There Are 14 Good Ways To Do Banking, And Then There's Mobile

Posted on August 13, 2007

First, let me warn anyone who is still reading my techno rants and raves, that I am not a fan of mobile banking. The reason is simple. There are 14 better ways for a commercial or retail customer to handle banking chores. And I believe there are still wonderful activities in life that one can enjoy without being wired to a bank.

Banking has always been a background thing for me, doing its thing while I'm doing my things, like the posting and updating run while I'm snoozing. Here are the 14 ways that take care of my banking:

1. The check - declining in numbers for good reasons, but still essential.

2. Credit Card - can't live without it.

3. Debit Card - can live without it, but a good alternative to writing a check while several people are waiting behind you.

4. ATM - The last time I heard anyone say this at work was 1971 - "Quick, I've got to get to the bank before it closes."

5. ATM-plus - Extra services are OK if they are simple like buying postage stamps. Buying stocks and applying for loans are good for only one segment of society - the homeless.

6. Telephone Banking (VRU) - Better than sliced bread yet some banks are still using a knife. It's easy, ubiquitous and non intrusive.

7. Call Center - A win-win-win (customer, bank, customer service rep).

8. Bank-By-Mail - On occasion, it's perfectly all right. Drop it into a blue box (or red depending on country) and it will get there in a few days. Some transactions don't require real-time.

9. Internet Banking - Still needs some refinement, better navigation, human engineering, less selling and more safety, but it will prevail.

10. Employees at a Branch - I didn't say just "branch" because some branches are like monuments and tombs - dormant. It's the employees who serve customers that are the real assets, even if they are in a tent. The strange part is that these buildings were going to go the way of the "checkless" and "cashless" society predictions of the sixties. Instead, there are more branches than ever. And may I add here, without bias, that Wachovia seems to have hired the right architects to maintain the beauty of Dallas. There was an old Texaco gas station in Snyder Plaza that is now a Wachovia branch. I missed the gas station, but I have the memory. It still looks like a gas station without the dirt and grease. We can have too many branches, but we can always use more beauty.

11. Night Depository - Maybe it won't last now with Remote Merchant Capture, but for the occasional user, it's a low-tech option that works.

12. Remote Merchant Capture - The shortest distance between a business and its bank is a data link. Safe, quick, accurate, at-your-convenience, and economical. Au revoir M. Courier!

13. E-Anything - The stats show that electronic financial transactions are gaining in popularity. Why it isn't pervasive is still a bit of a mystery. For example, I have business dealings with a dozen companies in the bank tech business. Only two make their payments electronically.

14. Fax - Maybe it's a legal thing. There's one service that I use among the 13 accounts I have at the second largest bank in the U.S. that requires fax communications. As long as it works, I'll continue to use it, even though I have to push the cobwebs off the machine to get started.

As for mobile banking, I've got better things to do while on foot.

- Art Gillis
www.artgillis.com

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BRIEF: First Data and mFoundry Team Up for Mobile Banking

Posted on August 10, 2007

Payments solutions provider First Data (Denver) and mobile solutions company mFoundry (Sausalito, Calif.) entered a partnership where they will work together to deliver mobile banking and payment services to U.S. and international mobile subscribers. The firms hope the newly forged relationship will leverage each company’s respective strengths to offer mobile operators, mobile subscribers, merchants and financial institutions a flexible and easy-to-use solution for mobile financial services.

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Mobile Banking from the Public’s Perspective

Posted on July 19, 2007

By Maria Bruno-Britz, Bank Systems & Technology

Sometimes I’m so wrapped up in our little banking world here that when I see the general public taking an interest in bank technology, I think it’s a pretty big deal.

While perusing the site Slashdot—which bills itself as providing News for Nerds—I noticed someone posted an excerpt from CNBC.com about the recent crop of mobile banking initiatives in the U.S.

While the article itself provided information that was old hat for those of us in “banking circles,” I found the ensuing comments by other Slashdot readers even more interesting. There was actually quite a lively debate on the topic by the site’s readers—most of whom, though technically savvy, are not bankers.

The viewpoints were varied. Some observations were amusing, like the one person who said that when he hears the term “mobile banking” he’s reminded of traveling through southern Missouri and actually seeing physical banks set up in large mobile homes.

Some felt mobile banking to be unnecessary and just a bunch of hype while others did seem to think that, though not vitally important their everyday lives, mobile banking would be a nice convenience. Others just didn’t think mobile banking was going to turn out well at all, many stating security as the roadblock. This I found interesting as evidence that there is still a perception in the public (even among supposed “techies”) that mobile transactions are unsafe. There were a few people, however, who were educated enough to point out that mobile banking transactions can be just as safe as those done online with a PC—128-bit SSL encryption, etc.

Then there were the comments from the international front. Readers from Europe, Asia and Latin America chimed in, stating how surprised they were to hear that mobile banking was just coming to the U.S. now. Well, as anyone from the FS industry would tell you, this is because of one part lack of interest and two parts of it not being necessary. After all, much as we complain about prices and taxes, the telecom system in the U.S. is pretty good compared to what other countries use, so we’ve been satisfied with the banking channels we’ve had.

I think the most interesting perspective was from someone who claimed to be in IT at a bank. He said his bank was piloting a mobile banking product and that the general response from his co-workers was along the lines of “ho hum,” that they wouldn’t be so inclined to use it. Once more, this illustrates the fact that there is a huge amount of uncertainty in the mobile banking market. Although study after study is released expounding the virtues of the mobile channel and how Americans are ready for this kind of banking, still more studies abound saying that the numbers aren’t as great as we’re lead to believe.

I think that at this point in time, banks are in a good position to test the cell phone banking waters a bit more aggressively than they did in the past. Cell phones today sport more advanced features than ever before and it seems like just about everyone has a phone glued to their ear. Of course, it will take a few of years before consumers latch on to this channel, but it will happen. And mobile payments will only serve to drive adoption of mobile banking further.

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Mobile Payments: Look to Korea

Posted on June 25, 2007

U.S. unit of Danal gets a boost from $9.5 million venture financing investment.

By Nancy Feig

Here on this blog we often air our skepticism about the proliferation of mobile payments. When we bring up that doubt to mobile banking and payments vendors their knee-jerk response to us is very often: "Danal."

Danal, little known in the United States, is the largest payment service company in the world. A public entity in South Korea, Danal pioneered the mobile payment industry in South Korea in 2000. Danal allows consumers to purchase goods and services online by charging their regular mobile phone bills. This service has seen wide adoption in Asia. In 2006, South Koreans alone charged more than $1 billion worth of transactions — representing 70 percent of all digital content purchased online — to their mobile phone bills. Danal currently holds close to 50 percent market share in South Korea.

That's big business. So when the news came out last week that Danal Inc., the U.S. subsidiary of Danal Co., Ltd.,, had received $9.5 million in venture financing led by Morgenthaler Ventures, the industry took notice.

Ken Gullicksen, a Morgenthaler partner, explained his company's investment to The Wall Street Journal. “The same trends that fueled the Korea market — including the increasing popularity of digital fare and new types of mobile services — are now hitting the U.S.,” Gullicksen related to the newspaper.

Danal will use the $9.5 million in venture financing to add to its team, commercialize its mobile payments service in the United States and strengthen its relationships with mobile carriers and merchants. In Korea, more than 16,000 merchants already offer mobile payment services to their customers.

It is likely that much of Danal's U.S. marketing will be targeted to the youth market. While Danal's service allows for purchase of physical goods and services, most of the purchases will likely be for digital content like online games, music, videos, ring tones, etc. According to Danal, typical purchases range from $1 to $30.

Danal works by allowing users to charge their purchases at participating Web sites to their mobiles phone bills without having to sign up for an account of even going through a credit card. The customer sends a text to the retailer and the transaction is complete in less than 20 seconds.

In 2005, the South Korean mobile payments market made up 8 percent of the country’s total eCommerce market. According to Forrester, the U.S. eCommerce market is on track to be more than $400 billion by 2011. If mobile payments makes up just a fraction of that amount, that’s could be close to $40 billion.

Consumers without bank accounts and/or credit cardfs will be the most likely to be the ones to utilize mobile payments technology from Danal. So, banks should pay special attention to this deal. There are no bank intermediaries in this supply chain. That $40 billion down the drain.

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Mobile Banking Providers Should Cool Their Jets a Bit

Posted on April 05, 2007

By Maria Bruno-Britz, Bank Systems & Technology

Last week, I reported on the sudden flurry of announcements around mobile banking and payments applications in the U.S. A number of deals were highlighted. Well, I’ll now add to that the most recent mobile banking rollout by Citibank for its California customers. It would seem there’s no stopping mobile banking now.

Or is there? At least one analyst is speaking up amidst the hoopla. Gartner’s Alistair Newton, research director for its financial services research team, says that banks better pay attention to consumer’s concerns around security before pushing this channel on them. “Adoption of mobile banking and payments by banks and consumers has been slow, limited to programs in countries that have either had a dominant mobile telecommunications supplier or minimal banking infrastructure,” Newton said in a statement. “However, a key hurdle to further adoption is assuaging consumer concerns about the security of banking or payment applications on the mobile phone.”

Newton isn’t the only one who urges caution in this area. For more on the evolution of mobile banking, see Retail Payments Business Moving More Toward Mobile where I discuss the issues around adoption of m-banking in the U.S. at greater length.

The bottom line is, for mass adoption of this channel to occur in this country, banks need to work very hard at convincing people that m-banking is safe. BS&T’s Nancy Feig talked about this very issue in Everyone’s Ready for Mobile Banking, Except Consumers. Of course, the early adopters tend to be less nervous about technology in general and won’t require as much hand holding. However, if financial institutions wish m-banking to catch on among the greater portion of their customer bases, a good deal of education will be in order.

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Much Ado About Mobile Banking

Posted on March 28, 2007

By Maria Bruno-Britz, Bank Systems & Technology

Within the span of just a few days, my inbox has been inundated with announcements related to new mobile banking/payments initiatives. Although consumers may not be quite as ready as proponents of this banking/payments channel claim they are, banks, telecoms and others are certainly making it clear that they’ll convince people to use mobile for more than just talking one way or another.

According to Celent, global mobile commerce revenues are estimated to have surpassed $24 billion in 2006 and will reach $55 billion by 2008. Said senior analyst Dan Schatt in a statement, “After booms, busts and false starts, we are now seeing evidence of a real mobile banking revolution sweeping across the financial services industry that will eventually fuse mobile banking and contactless commerce together. Banks, vendors and carriers have started to work out the economics in cooperative arrangements that can provide carriers with highly desirable financial services content, banks with a broad distribution and servicing medium, and consumers with a very efficient, secure mobile banking application. Banks have historically deployed mobile browser solutions to little fanfare. … Citibank, Wachovia, Regions Bank, Bank Corp South and SunTrust are all first movers here and we are likely to see more announcements follow soon from more of the top 15 U.S. banks.”

Here is a taste of what has been happening in the mobile channel recently.

Cingular Cuts Mobile Banking Deal with Several Banks
Cingular/AT&T signed agreements with several U.S. banks to provide mobile banking services to their respective customers.
The agreements will allow customers of AT&T’s Cingular Wireless arm and participating banks to manage their accounts and pay bills electronically by using an application on their cell phones.
Participating banks include Wachovia, BancorpSouth, Regions Financial and SunTrust. They will offer the service to AT&T wireless customers. People will download software to their phones from mobile applications provider FireThorn. AT&T plans to include the software in new handsets in the second half of this year.
However, as Bob Egan, chief analyst and research area director of TowerGroup’s Emerging Technologies group, said in a release, “The agreement among this handful U.S. banks and one U.S. wireless operator represents only a small step toward true mobile banking. Banks looking to gain traction in this space must extend their reach across all the major wireless telecom providers. Forcing consumers to make a wireless operator choice does little to move the mobile banking proposition to the mainstream.”

Metavante and Monitise to Create Mobile Payments System for North America
Metavante, the banking and payments technology solutions provider, signed memorandum of understanding to form a joint venture with Monitise, a European provider of secure mobile banking and payments capability, to operate a mobile payments system in the United States.
The joint venture will be designed to enable consumers to rely on a common, intuitive and secure interface to initially check account balances, transfer funds between bank accounts and pay bills any time from their mobile phones.

ViVOtech and Mobile Candy Dish to Provide M-banking and other Mobile Extras
ViVOtech, a provider of contactless payments technology, has partnered with Mobile Candy Dish, a company that offers unique features for cell phones, to allow mobile phone users to engage in the following activities through their phone:
• Purchasing Movie Tickets (sports, concert, and theater tickets will launch this summer)
• Getting Event Information (movie show times and trailers, sports scores, venue seating charts)
• Providing Financial Management--get account balance, account limit and electronic receipts (bill pay and money transfer to launch this summer)
• Finding Points of Interest (restaurants, nearby merchants, etc.)
• Getting Directions and Maps
• Allowing Consumer Customization (changing look and feel of the application, setting personal preferences, etc.)

Cellular South to Launch Multi-City M-payments Pilot
Wireless provider Cellular South is teaming with phone manufacturer Kyocera Wireless to launch a multi-city consumer trial of near field communications (NFC)-enabled wireless wallet technology.
Cellular South says the pilot will allow participants to use the m-payments technology at retail locations in multiple cities. Participants will use a Kyocera handset embedded with NFC technology to make payments by tapping the handset against a NFC-enabled reader.
The pilot will begin in May in Memphis, Tenn., and Jackson, Miss. The telecom says it plans to complete the trial by August 2007, with widespread consumer rollout of the in Q4 2007.

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Everyone's Ready for Mobile Banking, Except Consumers

Posted on March 16, 2007

By Nancy Feig

"If Paris Hilton can have her Sidekick hacked, how safe am I?" This comes from my (highly educated) friend when asked if she would try mobile banking. Another response: "I'm not that rich that I need to keep track of my accounts every minute. I'd rather play Tetris."

Yes, the vendors are saying the time has come for mobile banking, but an informal survey of my Gen-Y friends proves that they are not quite ready or in need of this new technology. And this group is allegedly the most likely to use mobile banking. I doubt that older generations are the target demographic for mobile banking — most of our parents have not even mastered online banking (they feel that their personal info will get lost somewhere in cyberspace).

However, some big banks are hoping that if they build it, we will come. Bank of America (Charlotte, N.C.), Citigroup (New York), Wachovia (Charlotte) and, in its second attempt, Wells Fargo (San Francisco) are betting on the fact that my friends and those like us will change our minds.

To do so, they will first have to convince us of a few things:
• It will be cheap. Most mobile phone carriers charge for Internet usage.
• It will be reliable. What happens to the transaction when a connection is interrupted or dropped?
• It will be safe. Can your accounts be hacked? What happens when the phone is lost or stolen?

Here We Go Again
This week, Provenir, a provider of enterprise software, released a white paper on mobile banking, titled, "Multi-Channel Banking: Banks Go Mobile. Again."

The white paper says that things that held mobile banking back before — lack of Web browsers on phones, no standard mobile technology, consumer skepticism — are now mostly gone.

The paper claims that technological advances, better understanding of technology and more tech-savvy consumers make today's environment ripe for mobile banking.

Provenir says that "very soon we will expect the fruit stand on the corner to accept payment through a mobile phone." Really, will we?

I do not doubt that mobile banking is something that will happen in the future, but how far into the future is the question. First the banks have to convince us that this is something that we need. Until then, my friends and I will stick with text messaging and Tetris.

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