Just How Relevant Is Mobile Banking?
Posted by George Pasley on August 30, 2007
Like every other bank in the world, we are looking at a mobile banking solution to provide to our customers. After sitting through two demos so far, I think the technology looks pretty slick. Side note – if anyone can explain how you can do mobile banking on a pager, as one demo suggested, I’d appreciate it. At first, I wasn’t convinced that we needed to rush into mobile banking. It was hard for me to imagine myself paying bills or doing transfers on a mobile phone. Sitting at a desktop or pulling out a laptop made more sense to me. I’d like to think that I had transferred the necessary funds before I was away from a computer.
The more I thought about it, the more I was convinced that there was no need to rush into this. The iPhone didn’t help matters. Using this phone, a customer could just go to our website and logon to perform their transactions as if they were on a computer. From what I’ve read, the iPhone blows away every other phone with its browsing capabilities. It only makes sense that other cell phone companies will adopt similar features and functionality. I also found it amusing that mobile banking companies announced iPhone compatible solutions. The functionality available is almost the same as logging into a typical online banking site with an iPhone.
As far as mobile solution providers go, I’m still not convinced that we need one. However, I am convinced that mobile banking will be huge and that it will be necessary. Travelers would find mobile banking very useful. Personally, I stay on the road. I’m also very hesitant to use someone else’s computer for my online banking. At home, I know I have a firewall on my computer and run anti-virus/anti-spyware software. I can’t trust all of my family and friends to have this in place. If I used my phone however, I wouldn’t have the same fear. I could easily pay my bills if I were out of town on pay day. Also, almost 1 out of 2 people have a cell phone, so I think it’s safe to bet that 90% of online banking users have a cell phone. The key will be getting them to adopt mobile banking.
In conclusion, I think mobile banking will be just as important to banking as the ATM. I just hope that people don’t expect it to achieve a significant penetration in less than five years. In comparison, the ATM is forty years old and internet banking is almost thirty years old. Becoming a major banking tool within ten years would be quite an accomplishment.
Rakesh said
Hi,
I found your blog a very good source of information. It is very informative!
I am a student at the Columbia University of NY and currently doing a research paper on the subject of mobile banking. I am of the firm belief that Mobile banking is there to stay and is definitely beginning to gain traction in the United States.
For that matter I also came across a lot of vendors providing solutions in the mobile banking space in the process of doing my research. And when I look it from the vendors point of view how do I take into account the risk involved in these investments. I want to know how vendors of mobile banking such as mfoundry, firethorn, obopay and the host of other new players entering the market are able to justify there investments.
In particular what kind of discount factor or cost of capital do startups go with when venturing into creating solutions for mobile banking considering that mobile banking has still not started to generate any substantial revenue for banks.
I would appreciate your advice and suggestions in helping me solve this puzzle.
Thanks,
Rakesh
rr2413@columbia.edu
George Pasley said
Rakesh,
As I’ve looked at more demos, I’m also convinced that mobile banking is here to stay. In fact, I think it will become a primary channel for banking. You can look at what is being done in Asia, Africa and Europe to see where we’re headed. Mobile payments seems to be the key that will drive revenue for banks.
Vendors are able to justify the investment based on the number of people that use cell phones. Firethorn, for instance, seems to be partnering with the wireless companies to help drive adoption of their product. mFoundry, along with ClairMail, seem to be focusing more on the banking relationship. The vendors are selling mobile banking as a separate channel, similar to online banking and IVR systems. I think this is the correct approach and FIs need to put a lot of thought needs into what goals they have for this new channel.
Cell phones are very vital to most people. To be honest, I’m looking forward to when we make a decision here on which vendor we will go with. Once people become comfortable with technologies such as PayPass, mobile payments won’t be that far behind.
Liza said
Hey, cool tips. Perhaps I’ll buy a glass of beer to the man from that forum who told me to go to your site