Wireless financial services a tough sell to consumers
Is the bloom off the wireless financial services rose? Was there ever even a bud?
There simply isn't any appetite among consumers for wireless financial services, say industry observers, and it doesn't look like they'll be getting hungry any time soon.
Although there was "interest a little while ago, it seems to have quieted down," said Ken Clemmer, an analyst at Forrester Research and author of a report, Who Wants Wireless Finance? The report found that barely 1% of the 40 million users who have the ability to conduct wireless transactions did so, and many of those transactions were non-banking. The most popular banking transactions were checking balances, getting stock quotes and making trades.
Moreover, less than 5% expressed an interest in conducting financial transactions in the future. The research shows there's "certainly not a need to have wireless applications for at least the next couple of years," said Clemmer.
Still, that hasn't deterred banks. In July, Wells Fargo announced that it selected Toronto-based 724 Solutions as its platform provider. The move is in line with the bank's "any to any vision," said Becky Wanta, vice president of wireless business technology at Wells Fargo Service Company.
"The focus of our... strategy is on making sure all of our services and applications are available to our customers over any device they choose to work on, and extends to our employees who need convenient access to time-critical information," she said.
But some banks that are toying with wireless are reluctant to share user data. CIBC, for example, launched a pilot project last November, headed by Janice Wagner, vice president of e-banking, to test wireless and get customer feedback. That project is wrapping up, but the bank declined to discuss it.
Although E*TRADE Group has an integrated bank and brokerage wireless project, it hasn't released specific numbers. "Our forecast and expectations for this category have always been realistic," said Jim Safka, vice president of global product marketing. "We are committed to the wireless category for long term."
At RBC Royal Bank, which has a wireless offering, consumer acceptance hasn't been significant, noted Marty Lippert, chief information officer. "However, we provide a wide range of options to accommodate individual preferences. We make wireless financial services available for those clients who view wireless devices as valuable tools."
At Bank of Montreal and its U.S. subsidiary Harris Bank, "wireless is not something we expected to explode overnight," said Mark Dickelman, vice president of m-commerce. Instead, it will grow over time, he said, noting that "we are continuing to see fairly aggressive adoption" of handheld devices.
However, wireless is not on everyone's radar screen. "Our focus is not on the wireless world," said Carol Kirk, president of Amicus Financial, a division of CIBC that provides private label banking services to retailers like Safeway and Loblaw. "To date we have not had significant inquires about wireless."
Instead, Amicus is focusing on the Internet. "Most folks have the infrastructure to be able to transact online. Not everybody has a Blackberry a popular PDA device from Waterloo, Ontario-based Research in Motion," said Kirk.
However, he isn't prepared to dismiss wireless. "If a customer wants wireless, naturally it will move up on the priority list."
Don't expect that to happen anytime soon, said Forrester's Clemmer. "I think that it will become mainstream... about 10 years from now."
So are bank wasting their money spending on wireless now? It depends on how much they're pouring into the wireless program. "You want to be familiar with it and build organization competency with the technology. You should be playing with it certainly, but not pushing it," Clemmer said.
The problem, he noted, is that there's not a lot of revenue generation opportunities with wireless and even fewer cost savings, as the candidates who would use wireless already use less expensive channels, such as the Internet.
And consumers aren't really interested in accessing financial services on a wireless device. While they will check account balances, there's no desire to pay bills or transfer funds. They would rather get e-mail, look up directions or maps and check the weather.
Moreover, expensive devices, slow carrier networks and competing standards impede growth. In August, the Banking Industry Technology Secretariat (BITS) released voluntary guidelines designed to facilitate wireless banking services. In the meantime, banks building wireless applications need to keep it simple.