The Financial Services Technology Consortium (FSTC) has created a working group to establish mobile banking standards and best practices. The goal is to facilitate a model that allows for interoperability of a mobile payments infrastructure, according to the New York-based industry group.
"We are looking to define rules and standards around the technology," says Jim Pitts, managing executive of payments with the FSTC, who notes that the development of the Internet channel offers a lesson on the importance of early involvement at an industry level. "People allowed the Internet to evolve on its own," he explains. "With mobile, rather than allow it to haphazardly evolve, we want to help shape it."
Pitts points out that many competing vendors are developing mobile banking solutions. Add to that the confusion around who owns the customer, he says, and the need for collaboration on the mobile channel is obvious. "We want to make mobile as universally compatible as writing a check or using a card," Pitts comments.
"We expect this group to facilitate a common understanding of the technology among the players, define the structure of the relationships with the players new to the financial services arena, define network dynamics and create business models that support a secure, scalable and financially sound foundation for banks to extend their financial services to the mobile channel," says Louise Clynes, an e-business strategy and planning executive at Atlanta-based SunTrust ($179 billion in assets), which is a member of the FSTC working group. "Each of these dynamics will have to be thoroughly analyzed and understood by the banking industry in order to move toward an efficient, effective utilization of this new technology."
At the same time, the FSTC's Pitts emphasizes, there is no need to reinvent the payments wheel. "Existing infrastructure rules and payments structures should be leveraged here," he asserts. "We will want minimum standards set for security. We need to look to the carriers and handset manufacturers, and we need agreements around where responsibility begins and ends."
'The Benefits of Working Together'
Currently, there are 30 members of the working group, which comprises banks, sponsoring entities and the Federal Reserve. While no mobile carriers have joined yet, "We hope to launch a series of roundtables where we bring together the banks, solutions companies, carriers and device manufacturers so they can see the benefits of working together," Pitts relates.
Pitts anticipates that the initiative will take about a year to a year and a half. In the first phase, the groundwork will be laid by trying to understand all the capabilities available, with a strong focus on security and interoperability. Subsequent phases, he adds, will involve recommending standards and guidelines for interoperability.
Marianne Crowe, VP of emerging payments research and business development with the Federal Reserve Bank of Boston, one of the FSTC working group's members, says the mobile working group is a perfect fit with her own group's mission. "One goal of the payments group at the Boston Fed is to help identify risks and barriers to adoption of new or enhanced payment methods, such as security issues, lack of standards and the need for interoperability," she explains. "This is something we can be involved in through the FSTC mobile payments working group by serving as a resource for information and bringing an unbiased position to the discussions."