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Mobile Banking: A Bonanza (or Bust) for Banks?

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There was a time when this kind of writing would have seemed almost un-American. However, that was when the spirit of the American public was based upon innovation and a can-do attitude, both of which were widely admired. Today, negativity and criticism seem a more popular, crowd-pleasing approach.

Mr. Kahr uses the rearview mirror approach to make his points, and that is okay. It may be true that ATM's did not cut costs and improve bank profits and that NFC cannot get people around the checkout line; that "consumer transaction volume growth through new payment mechanisms is glacially slow;" and, that wallet products for PCs burned through a lot of venture capital with no success. The problem with viewing things through a rearview mirror, however, is that the view is so limited.

Another way of looking at these things is to start with what folks were attempting to do and asking what was driving them at the time. Has NFC is been touted as a cost saver or a convenience? As a cost saver, it begs the question, how can it do that in a "not-present" environment, such as cyberspace? NFC is a good application for tracking inventory, but it was not designed to authenticate or to secure transactions in cyberspace. Similar conclusions can be drawn for tokenization, biometrics and passwords.

A proper question is, did these products do what they were originally designed to do?

After stating his series of conclusions, Mr. Kahr asks, "Why should this time be different?" ...why is the glass half empty?

Innovation and the ability to adapt solutions to problems are part of what made this country great. Rearview mirrors also reveal the works of Edison, Ford, Firestone and Jobs. Which is to say that there is more to hindsight than just failures.

Mobile should be a priority for banks. Why? Because it is something their customers want.

Can authentications in cyberspace be both convenient and secure, while lowering costs and improving bank profits? Don't bet against it... In fact, some solutions may already be out there.
Posted by rcarrott | Monday, December 17 2012 at 5:14PM ET
Another flower of yesteryear...Mailway Banking. Crocker First National Bank introduced it as a more convenient way to bank back in 1944. Crocker First National Bank also helped pioneer ATMs a few decades later. Being the first provider of these innovative new channels (which did eventually become mainstream) didn't help Crocker First National Bank avoid getting gobbled up by Wells Fargo in the 1980s. Being the first is rarely the most profitable course of action, because (as you point out) consumers are generally unwilling to embrace change right away (particularly when it comes to their financial lives).
Posted by Alex Johnson | Friday, December 28 2012 at 5:12PM ET
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