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M-banking is major priority for US Banks 5/15 DJ Now that online banking has been around for more than a decade, & widely accepted by customers, banks are turning their attention to taking the show on the road. Aite found 23 of the 80 largest US financial institutions expect online & m-banking will be top priorities for product development in the next 2 years. The survey covered 22 banks & one CU, & 11 of the top 15 banks in the US. The survey found that in the next 2 years, banks are intending to invest heavily in new fee-based payment services, m-banking innovations & online marketing efforts. It is a service that multitasking consumers are demanding. ‘People are very keen on using the phone to do m-banking in a couple of ways, including checking accounts, balances & direct deposits & to help them find banking centers,’ said BofA’s Doug Brown. Banks have specific targets for mobile advancements, as well: 65% of respondents to the survey said they will focus on expedited bill payment as a main priority in the next 24 months. That number was nearly matched by the 61% of respondents who said they will make preapproved, special offers to online customers a priority. BofA has 1m users currently using m-banking & expects that number to jump in the next 24 months as it rolls out more features. Other m-banking proponents include Citigroup, which rolled out its Citi M-banking service in 4/07, & Wells Fargo, which debuted Wells Fargo Mobile last July. All of these mobile programs attempt to bring banking services to customers via phone- or browser-based technology. Still, most banks are trying to find a way to take the m-banking experience to the next level, which is a task that presents multiple challenges. ‘At the moment, m-banking is online banking ‘lite,’ bringing many of the basic information-related services such as balance checking to the mobile domain,’ said Nick Holland, Aite. Don Rhodes, ABA, said m-banking is currently limited to 3 main technologies: SMS, or ‘text messaging’; mobile Internet; or downloaded or preloaded programs. Creating programs that work on all phones for all users can be a major hurdle for most banks. ‘One of the challenges for m-banking today is the lack of interoperability among these technologies. Some telephone carriers support only one technology. Some phones support only text messaging, not Internet access. Interoperability, security & scalability are all challenges that have to be addressed not only by banks, but by telephone carriers & handset manufacturers, as well.’ That may change as sophisticated handhelds, like the Apple iPhone & third generation BlackBerry devices are now flooding the market, & the new capabilities are sure to drive new services. ‘You’ll start to see some more mobile-only features such as ‘panic’ bill pay over mobile in the next couple of years, & services that leverage the uniquely mobile attributes of ‘always on, always have’,’ Holland said. ‘Like location-based, opt-in information, where the device notifies you of sales & promotions that are happening in the vicinity.’ Holland said that banks are interested in what he called the ‘Holy Grail’ of m-banking: the phone as a payment device, allowing users to pay for anything at a retail location by simply tapping a secure phone reader. Holland said banks may have to wait for that capability for at least 3 to five years. But the market may be moving too fast for many new initiatives, the survey indicated. More than 70% of respondents said that the number one barrier to growing online banking & bill payment adoption is their difficulty to roll out new functionalities fast enough. That can be a major hindrance to banks & other large financial institutions looking to roll out fast, simple customer outreaches, only to find those programs & interfaces are passe. Gwenn Bezard, Aite, said she was surprised by how committed banks remained to the m-banking model. ‘I find it striking that financial institutions are gung ho on rolling out m-banking, even though the actual market demand & the business case remain elusive. Adoption of m-banking in markets that have made it available for many more years, like in Europe, remains in the low single digits.’ BofA’s Brown disputes that assertion, saying that although only certain forms of m-banking have caught on in other parts of the world, he remains convinced that there is a significant market need for it in the US. ‘The North American market is moving ahead & has some differences that make up the infrastructure, which is why iPhone was launched here first. That will drive some differences,’ Brown said. ‘But we are bullish that m-banking resonates with most customers, so we are just racing ahead to deliver those steps.’