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Wireless carriers & financial institutions are collaborating on m-banking services to attract young bank consumers, increase data revenue & pave the way for ‘mobile wallet’ applications in the US. ‘We’re looking at mobile financial services in the US as the first ‘grown-up’ application for the mobile device,’ says Lisa Stanton, Monitise Americas. ‘It’s not a game or a ringtone or wallpaper.’ Financial institutions are rapidly adopting m-banking to extend & leverage their online banking platforms. BofA & Citibank, which introduced mobile applications in the past couple of years, were considered pioneers. But by year end, consumers are likely to expect mobile services from banks of all sizes. In the US, which is considered lagging countries in Asia & Europe in wireless offerings, m-banking takes several forms. One of the most common approaches is WAP, which re-renders Web sites into a format suited for mobile handsets. Some banks are offering text-messaging services that allow customers to check their balances & review account histories, such as the last 5 checks to clear. Perhaps the most sophisticated (but least common) version is a m-banking application that is downloaded to the user’s phone & resembles the bank’s Web site. The application, branded with the bank’s name, allows customers to establish secure connections & check balances, transfer funds between accounts & pay bills via the handset. ‘While taking into account capacity management on their network, the carriers would like to enable people to do on their mobile phones pretty much anything they can do on the Internet,’ says Sanjaya Krishna, KPMG. ‘The steady growth in smartphone adoption is helping to hasten this reality.’ Krishna says. Wireless carriers & banks both see m-banking services as an important way to attract young consumers as they enter the workforce. ‘The carriers see it as providing bragging rights if they establish a relationship with a major bank to provide m-banking - that’s a feather in their cap,’ says Timothy Norris, a director in KPMG’s ICE practice. ‘They feel they have to be involved from the beginning.’ Monitise’s Stanton says services such as m-payments that are designed to take advantage of wireless handsets will be an important milestone in m-banking adoption. ‘If we consider m-banking just a re-rendering of the online banking channel, then we’ve missed the boat, because we wouldn’t have provided the consumer with anything new that would cement their relationship with their financial institution,’ Stanton says. While current m-banking applications are basic, carriers & banks expect that within 2 or 3 years they’ll be collaborating on wireless handset uses such as a payment device for ‘mobile wallet’ applications. Such payments are already being used in Europe & Asia to make retail purchases & to top off mobile minutes or other stored-value accounts. ‘As more retail companies accept payments via mobile handsets, the banks have more opportunity to lock in the mind- & wallet-share of the young market segment that will become the stable customers of tomorrow,’ Norris says. According to ‘M-payments in Asia Pacific,’ a KPMG white paper, several carriers have embedded ‘contactless’ payment chips in handsets for the past 5 years. For instance, handsets are used in Korea & Japan to make retail purchases, payments on behalf of others, purchase characters & Internet access for multiplayer online games & pay for cable TV bills & club membership fees. While payment arrangements vary, in most instances the mobile carrier & third-party payment processors receive small commissions on transactions completed via mobile handsets. For m-banking applications to take hold in the US, several challenges will have to be overcome. For instance, the variety of US carriers & wireless standards complicates banks’ ability to roll out mobile applications. ‘If there are only specific banks you can access on a handset, & that’s driven by who your carrier is, that’s an obstacle,’ KPMG’s Krishna says. Similarly, because m-banking applications are relatively new, the revenue models haven’t been developed. Because banks & carriers have regarded m-banking as a customer-attraction & retention feature, they have been reluctant to charge for it. ‘The reason some technologies are slow in coming out is because it may not be economically feasible for the carriers to charge for them,’ KPMG’s Norris says. ‘Banks have the same issue. But until the carrier promotes it & actively educates the consumer, the consumer doesn’t know the service exists or doesn’t understand how to use it, & therefore doesn’t adopt it.’ Security is another important factor. Although the downloaded handset banking applications require the use of personal identification numbers & encrypt user data before it is exchanged, banks & carriers will have to convince users that m-banking is as least as secure as its Web-based counterpart. ‘Security is an inhibitor, but it can be overcome,’ says David DiCristofaro, a partner in KPMG’s IT Advisory practice. ‘The same way that security relative to online banking was initially a challenge, ultimately technologies & processes have to been found to take that challenge out of play.’ Banks & carriers are also optimistic about the potential for m-banking applications to reach segments of the population that otherwise wouldn’t have access to a traditional checking or savings account. For example, consumers who have opted to have income-tax refunds or payroll checks delivered to a stored-value card can monitor those accounts via their mobile phones, & receive alerts of new deposits or low balances.