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Mobile Banking Experiencing Increased Adoption

As an increasing number of institutions pursue mobile banking initiatives, questions remain over which delivery model is best, whether consumers really want the service and how banks can realize a return on their investments.

Mobile Banking Platform Options

Banks have some options when it comes to mobile banking technology. Generally, there are three mobile banking formats: text messages/SMS, Web browser and downloadable application. Many banks have decided to hedge their bets by offering more than one option, or a combination of functionality, to their customers.

For example, Bank of America's ($1.3 trillion in assets) mobile banking service, which launched in May, is a browser-based system. But customers also can receive customized alerts via text message, according to the Charlotte, N.C.-based bank.

"I think a combination of all three is the ultimate solution," says Brandon McGee, Indianapolis-based VP and product manager for mobile banking at The Huntington National Bank ($55 billion in assets) in Columbus, Ohio. McGee also runs a popular mobile banking blog. "You are targeting Gen Xers and boomers with the browser, SMS is for Gen Ys and the downloadable application has a number of big benefits," he continues. "Each one has just a little something special."

Forrester's Graeber expects demand to increase for all three formats. "There will be a push for vendors to offer more than one type of platform," she says.

Late last year, mFoundry (Sausalito, Calif.) and ClairMail (Novato, Calif.) formed a strategic partnership to offer a combined solution that integrates ClairMail's SMS capabilities and mobile Web access with mFoundry's downloadable application. In October, Winston Salem, N.C.-based BB&T ($126 billion in assets) became the first bank to purchase the combined solution. "MFoundry's feature-rich application combined with the ClairMail messaging, mobile Web and two-way capabilities will give BB&T one clear and easy solution," says mFoundry CEO Drew Sievers, who asserts that every bank in the mobile space is using at least two of the different platforms.

But Huntington Bank's McGee expects momentum to build around browser-based solutions. "You might be more likely to see more announcements around a browser-based solution because it's an inexpensive way to get into the game," he says, noting that Huntington Bank has not yet unveiled its own mobile banking plans. "A slightly higher percentage [of banks] start from that route. That would be a good Phase 1."

Some vendors, such as Firethorn, already are looking at the next generation of mobile banking applications. The Atlanta-based firm, which recently was acquired by wireless-technology provider Qualcomm (San Diego), is the leader in preloaded solutions. In addition to enabling bank customers to download its application from banks' Web sites "through the air" to a mobile phone, Firethorn has partnered with AT&T and Verizon to preload Firethorn's mobile banking application onto the carriers' new mobile phones.

"When you walk in and get the new AT&T phones, there is a flyer in there that says, 'Enroll in mobile banking,'" relates Tripp Rackley, Firethorn chairman and CEO. But it wasn't easy to convince the carriers to include the mobile banking application on their phones, Rackley says. "If you think about the real estate value of the screen on the phone, as many people that touch it and look at it each day, I personally think it's the most valuable real estate in the country," he comments. "To get AT&T and Verizon to see the vision of mobile commerce as something for which it is worth giving up real estate was a major endeavor."

The preloaded option is set to outpace other mobile formats by leaps and bounds, Rackley contends. "If you talk to any of the carriers, they will tell you that with an application that is readily available on their Web site as compared to preloaded, ... adoption [of the preloaded application] is 30 to one," he says. Banks that already have joined the Firethorn network include Wachovia (Charlotte, N.C.; $557 billion in assets), SunTrust Bank (Atlanta; $172 billion in assets), Regions Financial (Birmingham, Ala.; $134 billion in assets), BancorpSouth (Tupelo, Miss.; $13 billion in assets), Synovus (Columbus, Ga.; $24 billion in assets) and FirstBank (Lakewood, Colo.; $889 million in assets).

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