M-Banking is Now Past Its ‘Pivotal Year’

Bank Technology News
January 8, 2010 | COMMENTS

At the start of 2009, consumers said it would be nice to manage their accounts with mobile phones. Now, they're demanding such services.

After years of development work by financial companies and vendors, mobile banking is coming of age. Early adopters have quickly come to appreciate the convenience of managing their money anytime, from anywhere, and many observers say these functions are only the beginning.

“I think we will look back at 2009 as the pivotal year for mobile banking,” said Fred Brothers, the managing partner of the technology consulting firm eCom Advisors in Dublin, Ohio. “I don't think people appreciate that yet.”

Industry observers say many middle-age consumers will be dragged into the future by their children, in much the same way as the parental generation has adopted text messaging to stay in touch with their children.

Richard Crone, founder of Crone Consulting, said mobile banking and payments are taking off much faster than online banking did. People are already comfortable with the idea of managing information with phones and managing financial details feels like a natural next step to many consumers.

"With online banking, we had to wait for people to get modems in their computers and sign up for online service and get familiar with the process," he said. "None of that is necessary with mobile banking. All you have to do is to create the service."

James Van Dyke, the founder and president of Javelin Strategy and Research, said phones offer some capabilities that banks can't deliver through any other channel, notably text-message alerts that can reach customers immediately. Though people can get alerts by e-mail, this isn't very useful to those who are not in front of their computers.

But financial institutions' text-message alert services often have room for improvement. “We're bullish on mobile banking and mobile finance in general,” Van Dyke said, “but there are some very specific areas where they're coming up short.”

Institutions have found it difficult to set up mobile alerts for transaction notifications, balance thresholds, overdraft warnings, or other financial matters that the user might want to know about immediately. In fact, alert adoption has lagged Javelin's expectations, and the blame lies less with the users than with the systems, he said.

"They're just awful," Van Dyke said. "It's all about lousy interfaces. It's not about a lack of interest in using it."

Some companies are making headway on instant notifications. Visa announced an alliance in November with the mobile banking technology company ClairMail to deliver Visa alerts at the point of sale.

Cardholders at participating institutions can enroll their cards to get text messages confirming transactions, often before the clerk hands over a paper receipt. Visa introduced some alert features in 2008, initially for handsets with Google's Android operating system.

Other companies are also rolling out financial tools for phones. In mid-December, PayPal announced that its mobile Send Money application was available for the BlackBerry.

Reprinted with permission from Bank Technology News.