THE MOBILE BANKING SPACE saw several shifts last week, as Qualcomm Inc. announced that it will acquire mobile banking company Firethorn Holdings L.L.C. for $210 million, and AT&T Mobility launched a Firethorn-supported platform that will be preloaded on its handsets starting later this year.
Analysts expect to see further consolidation within the mobile banking and payments space. Chief analyst Bob Egan and analyst Charul Vyas of TowerGroup indicated in a research note that mobile banking companies are drawing accelerating investment.
“The dominant players in mobile, Internet, payments and information technology will surely take notice and consider acquisitions that could help drive their own strategy within the space,” according to Egan and Vyas.
Aite Group senior analyst Nick Holland said that observers can “expect something of a gold rush of mobile banking vendors being snapped up over the next few months as Qualcomm’s acquisition telegraphs the transition from vaporware to legitimate business opportunity.”
Firethorn’s technology links financial institutions and mobile network operators, allowing users to check bank balances and transfer funds from their handsets. Firethorn’s operations will remain in Atlanta and be overseen by Len Lauer, Qualcomm’s executive VP and group president. Qualcomm said it hopes the acquisition will help banks drive consumer adoption of mobile banking services as well as mobile payments.
“The combination of Qualcomm’s technology strength, global reach and operator relationships make this an extremely powerful development in the world of mcommerce,” Lauer said.
Holland said that Qualcomm’s acquisition of Firethorn could speed up the deployment of its mobile banking and payments platform internationally, as well as “open the door for Firethorn to be the mobile payments platform of choice for mobile operators using the CDMA standard”-including U.S. carriers such as Verizon Wireless and Sprint Nextel Corp. Verizon Wireless has already acknowledged that it is exploring a mobile banking service with Firethorn.
M-banking draws interest
David Thompson, VP of marketing for mobile banking company Clairmail Inc., echoed the fact that Qualcomm’s purchase validates the mobile banking industry.
“It’s still really early in this space, and it shows the potential that people find in mobile banking and payments,” he said.
He theorized that the chip maker could be looking to the future of mobile payments, particularly in the area of near-field communications and the chips to enable such transactions-although he also pointed out that the development of NFC is seen as farther down the road, due to the complex ecosystem that needs to be in place to enable such transactions.
Thompson-whose company is in partnership with mFoundry and offers mobile banking services via a variety of interfaces, including SMS, mobile Web and a native client-said that many banks are looking for choice in how to deploy mobile banking and appeal to the widest segment of their customers, regardless of carrier or phone model, to increase chances of adoption. Qualcomm, in contrast, has a reputation for a closed and proprietary approach to products.
Asked about the possibility of Clairmail being acquired, Thompson acknowledged that “people are interested in what we’re doing,” but added that “there are always discussions around that, and there always will be, and there’s really nothing I can specifically comment on. Our focus is really on continuing to build a great product, sign up customers and get them rolled out.”
AT&T Mobility’s offering is now available for download to more than 30 of the carrier’s devices, which account for about 30 million wireless handsets in the market. The carrier said the service is free aside from data charges.
The wireless operator noted that since its first banking partner, BancorpSouth, went to market with mobile banking earlier this year, “adoption rates have been higher than expected and have resulted in a 15% traffic increase to the bank’s Web site.”
Other financial institutions that are either offering AT&T Mobility’s mobile banking service or have signed agreements with the carrier to offer the service include Colorado-based FirstBank, Synovus, Regions Financial Corp., America First Credit Union and Arvest Bank Group.
Also last week, the GSM Association announced that a dozen mobile operators will run trials of contactless mobile payments over the next several months. Countries involved in the trials include the U.S., Australia, France, Ireland, Korea, Malaysia, Norway, Singapore, Taiwan, Turkey and the Philippines. The trials are part of the GSMA’s Pay-Buy-Mobile initiative for Near Field Communications payments.
RCR Wireless News Reporter Colin Gibbs contributed to this report.
