Firethorn Holdings L.L.C. has been a driving force behind many of the major mobile banking announcements within the past year. Recent news that chip maker Qualcomm Inc. would acquire the company has been taken as both a validation of the m-commerce space and a sign that the mobile banking and payments area is starting to mature, with more acquisitions expected. Tripp Rackley served as Firethorn’s president and CEO, and will continue to lead the company once it is acquired; Rackley described the company’s status as an independent company under the auspices of Qualcomm.
Firethorn has approached mobile banking by partnering with both carriers and banks to provide a downloadable or pre-loaded application that works on a specific list of handsets and allows various banks to offer similar services.
The small company made a big splash at last spring’s CTIA Wireless 2007 show, when AT&T Mobility announced that it was working with the company on a mobile banking application that would be preloaded on its handsets and allow banks to offer mobile financial services via a model quite similar to how AT&T Mobility offers e-mail services from various providers. The company also is considered a strategic partner for Verizon Wireless’ mobile banking strategy, although the relationship is not exclusive.
In mid-November, AT&T Mobility announced the national launch of its mobile banking service-followed almost immediately by the news that Firethorn had agreed to be purchased by Qualcomm for $210 million.
Rackley said that Firethorn had been in discussions with Qualcomm “for a period of time on and off” about how the two companies could partner on mobile banking and payments.
“We weren’t looking to sell. We were looking at ways to accelerate the industry”-and the deal with Qualcomm accomplishes that, Rackley said, along with giving Firethorn access to Qualcomm’s international reach.
Ultimately, mobile banking is seen as a stepping stone to mobile payments, which could offer wireless operators a slice of new revenue beyond mere data charges for use of an application.
Financial institutions are talking up mobile banking opportunities today, Rackley said, because “it’s what people have live and can talk about.”
Contactless payments next
He said he expects to see contactless payment trials soon, but noted that “the ecosystem isn’t built for contactless, the business models haven’t been solved.” The technology may be available, he added, but “it doesn’t matter until consumers are willing to do it.”
However, that is the direction that the space is going, Rackley said-even if it’s a ways off.
“I think personally that it will take personal finance and personal payments to a level that people will never believe that they didn’t use it in the first place,” Rackley said.
He envisioned a customer walking into an electronics store wanting to purchase a television, and being able to open his or her phone and check their available credit and debit balance, and perhaps apply for a financing deal from the store on the fly.
Rackley said that consumers will first have to get comfortable with contactless payments via their credit or debit cards-such as the payWave system now being promoted by Visa.
Finding consumers’ comfort level
Merchants such as McDonald’s, CVS, Walgreens, Whole Foods and 7/11 convenience stores already offer point-of-sale stations that allow contactless payments, Rackley said, and drivers are increasingly comfortable with the use of devices such as the wireless transponders that allow tolls to be collected electronically in various states.
Although he said that the necessary infrastructure and ecosystem for mobile payments is more complex than that of mobile banking, Rackley took note of how quickly both merchants and consumers adopted the pay-at-the-pump system for credit cards.
In 2008, Rackley said he expects to see more movement in what he calls the “alternative payments” space, including gift cards and money transfers, including international remittances. Also, he expects to see financial institutions making “mass decisions” in those areas, as well as laying out tactical objectives for their involvement in the mobile space. In 2007, Rackley said, banks “made it all happen because the market happened overnight.” In 2008, he said the decisions will be far more strategic.
Rackley noted that although consumers aren’t sitting around wishing for mobile banking and payment services, they are sending indications that having financial information on-the-go would be useful. He said that about half of the calls to banking service centers are customers seeking to check their account balances, and also to see if particular transactions have cleared. Making that information easier to access definitely offers value to consumers, he added.
Firethorn’s competitors in the space include those using messaging or browser-based approaches to mobile banking, which Rackley said he expected to “play themselves out” in the short-term.
He said his goal is to “turn the mobile device into a financial vehicle. . I’m not interested in taking Internet banking and converting it to a mobile device, but creating a new consumer experience to leverage all the things . about Qualcomm and being able to expeditiously leverage our partnerships with AT&T and Verizon, coupled with financial institutions.”
