The Bank Of Montreal (BOM) will suspend its Canadian and U.S. wireless-retail-banking services and its Canadian-wireless-brokerage service as of July 31, according to a spokesman who attributed the decision to low consumer-adoption rates. However, U.S. customers of BMO's discount-brokerage subsidiary will continue to have access to Harris Direct's wireless brokerage services. Harris Bank is a U.S. subsidiary of Bank of Montreal. Customers are being notified now of the service suspension.
The move is further evidence of a downturn in demand for wireless financial services market, spurred by the recession, falling IT budgets, a decline in retail trading and the telecom implosion. In a recent report, Celent Communications estimates that the number of active users conducting wireless banking and brokerage transactions has been steadily dropping from a peak of 250,000 in 2001.
"Consumer adoption of wireless technology for financial transactions has not reached the critical mass required to sustain the costs associated with offering this service," stated a Bank of Montreal spokeswoman, who added that the bank would "consider re-entering the market once customer demand picks up."
BMO's platform was provided by 724 Solutions, a Toronto-based supplier of e-commerce and wireless applications. In BMO's case, the platform was not hosted by 724.
Yet, the suspension is surprising because BOM was the first customer, a big supporter and investor in 724 Solutions, says Mike Haney, analyst with Boston-based Celent Communications, who authored the report. Harris Bank was also the first bank in North America to offer wireless banking services, he notes.
According to the spokeswoman, BOM continues to be an investor in 724. It owned more than 3.9 million common shares or 6.8 percent of the company as of June 24.