Banking buzz: Companies eager to test, deploy mobile money applications

Money was the root of all interest at the recent CTIA Wireless conference, with various announcements from companies that want to play in the mobile payments and banking space, and a great deal of buzz about the potential opportunities for banks, operators and the providers of applications that will enable customers to use their phones to access funds.
Chief among the buzz-begetters were proclamations from AT&T Inc.’s wireless unit and mobile banking enabler Firethorn L.L.C., which partnered with aggregator CheckFree Corp. to put mobile banking in motion at banks such as Wachovia Corp., Regions Financial Corp. and SunTrust Banks Inc., as well as launching an actual, live mobile banking service with BancorpSouth Inc.
Firethorn Chairman and CEO Tripp Rackley categorized the CTIA announcement as “probably the biggest tipping point of this entire industry. It’s what people have been waiting to see happen” to prove that carriers and banks can work together successfully.
Firethorn also announced that it
was working with Verizon Wireless on a mobile banking play. A few days later, Citibank unveiled a downloadable mobile banking application that it dubbed Citi Mobile, which was developed in conjunction with mFoundry Inc.
Tower Group chief analyst Bob Egan said that mobile banking is simply a means to an end for wireless operators: it’s a way to eventually get to mobile payments and remittances, which hold the potential for a new revenue stream if carriers can get a cut of the fees charged for payments. Mobile banking, Egan said, isn’t likely to push new customers to the operators, nor drive large amounts of new ARPU based on data use.
“Mobile banking is not something that draws customers to a network, it’s one of many things that would keep them on somebody’s network,” Egan said.
But, he said, it will help “create more human connections between the phone and the world beyond voice. . The connection is there, but it’s not a tight, instinctual connection yet. Mobile banking is just another blade in the weapons arsenal that will create more and more human connections to do more and more human things with a phone-but, it’s got a soft business proposition,” Egan said.
The user experience of mobile banking will be a crucial factor, Egan said. Rackley agreed.
“It’s all about discoverability in the wireless world,” Rackley said. “It’s great that we’ve signed [multiple banks], but if we don’t put a platform out there that’s easy to use and easy for consumers to find, it won’t matter.”
While Firethorn and mFoundry have been taking the downloadable application approach, it isn’t the only one out there. California-based Clairmail Inc. announced last week that it has a partnership with Canadian telco Telus to use a messaging-based system to enable mobile banking.
Clairmail emphasizes the two-way communication ability of its product, as well as the near-ubiquity of text messaging and/or wireless e-mail capabilities, which eliminates both the need to put new software on a phone, and makes the service broadly available to users of all types of phones and carrier networks. Clairmail’s system also has the potential to cut banks’ costs on Interactive Voice Response systems, according to Dave Thompson, Clairmail’s VP of marketing. He cited an example of when a bank detects possible fraud activity, which could generate an expensive outbound call from a call center-using Clairmail’s system, a text message or e-mail could be generated that is more likely to reach the customer quickly to find out if the charges are legitimate.
Clairmail relies on several levels of security including PINs entered by users to authenticate themselves and never involves having account information stored on the phone. The company is in production pilots and at least one beta test, Thompson said.
“We basically are in four of the top 10 banks in North America and one of the largest retail brokerage firms in North America at various stages,” he said.
Perhaps unsurprisingly, Rackley was skeptical about the use of messaging for banking.
“Quite honestly, I don’t believe that anything-whether Firethorn or not-if it’s not an embedded application on the phone in partnership with the financial institutions, I just don’t see any mass scale usage of the platform,” Rackley said.
Rackley predicted that more mobile banking announcements from banks and carriers will come throughout this year and next year, as well as more launches of actual services.
“Once the financial services industry starts to move in one direction, they move really quickly,” he said.
Some banks haven’t yet announced mobile payment arrangements because they’re busy trying to figure out which phones their online banking customers use and which carrier’s network those customers are using, in order to maximize the number of potential customers who would be likely to use a mobile banking service, Egan said. Given the sheer number of financial institutions in the U.S., it’s interesting to note that the banks AT&T partnered with are all based in the former Cingular Wireless’ customer stronghold in the south.