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Making Mobile More Secure

Security concerns about mobile banking has apparently been part of the reason for the slowing of growth in the channel.  Fortunately, some very smart people are working on solutions that will help ease those fears.

Apple will be releasing facial recognition technology in their iOS 5 update.  This means that mobile banking apps for Apple products will be able to implement a new layer of security.  I can imagine that developers will jump all over this feature.  One can only hope that vendors will be aggressive with implementing this also.

You can read more about the update over on ReadWriteWeb.

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Verizon Gets iPhone

January 11, 2011 1 comment



Well, it’s official. The iPhone will now be available on the Verizon network. This is something that I and a lot of others have been eagerly awaiting. I think that ultimate mobile banking app just became a necessity for banks and credit unions.

Pre-ordering for existing customers will be available on Feb 3rd and everyone else on Feb. 10th. $199 for the 16GB, $299 for 32GB, mobile hotspot included with up to five devices.

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The Death of Free Checking

January 2, 2011 Leave a comment

All I wanted for Christmas was for someone to sit down with me and explain how a checking account was profitable.  Well, I didn’t get that present, and I still don’t know.  Now, I don’t really believe that free checking accounts will go away.  But I do believe that banks and credit unions that continue to focus on checking accounts may go the way of the dodo.

Changes in banking laws have done nothing but hurt the profitably of checking accounts.  In the past, fee income and interchange fees drove the focus on this account type. Now, overdraft fees have been drastically reduced.  It also looks like a law will be passed that will limit the amount that can be earned from interchange.  But as they say, trouble comes in threes.  Number three will be mobile payments.

This summer, iPhone 5 will hit the market, and along with it, NFC capable phones.  Although the Android based Nexus S is NFC capable, it’s not currently being used with mobile payments.  Apple will change that.  Even with “antennagate”, Apple has sold close to 6 million iPhone 4s.  A newer phone that fixes the old problems and adds NFC will be big.  The kicker would be offering the iPhone on Verizon’s LTE network.

With all of this pushing down the profitably of checking accounts, why would banks and credit unions continue to focus on them?  I think the industry has it wrong.  Checking accounts are the razors, savings accounts are the blades.  If you look at the history of the industry, savings and loans are how we made money.  Fee income from checking accounts was just the gravy and caused the industry to get lazy.

Once it got to the point that fee income became the focus, the beginning of the end started.  The interesting thing is, customers seem to be most interested in savings and convenience.  According to one poll*, customers that signed up for Bank of America’s “Keep The Change” and Wachovia’s (Wells Fargo) “Way 2 Save” programs did so to build their savings accounts.  Of course, the banks most likely did it to build their interchange fee income, but they also built up their deposit base.

I am definitely in the savings and customer convenience camp.  Apparently, I’m not the only one.  At the end of the day, banking is a service industry.  Focusing on customer needs is what built the industry.  Now, it’s what will save it.

*The people surveyed consisted of me (BofA customer) and a cousin (Wells customer).  See, you can find a statistic for anything

Photo from Ziggy on GoComics.com

Mmmm…Gingerbread

November 17, 2010 1 comment

Mobile payments are about to get a serious toe-hold in the US.  In case you haven’t heard, Google is about to release the newest version of Android, Gingerbread, which will support NFC.  Once Apple releases their next iPhone in 2011, you can expect adoption to increase exponentially.

So what does this mean to banks and credit unions?  Most won’t be affected for a while.  But the big boys like Bank of America, Wells Fargo, Citibank and JP Morgan will really start to feel the pain sooner rather than later.  Mobile payments will allow users to connect their credit and debit cards to their phone.  But that’s only if Google and Apple decide to play nice.  They could set themselves up like PayPal, which means that everything would flow through ACH.  If that happens, you can kiss interchange fees goodbye.  The bigger banks would feel this first because their customers are among the early adopters.

Now, you can stick your head in the sand and hope that adoption doesn’t happen for another 10 years, or you can start planning your strategy today.  One thing I’d look at is charging a fee for any ACH withdrawal.  The second is getting familiar with iOS and Android.  Because if you aren’t planning to adapt, others are.