OLYMPIA, Wash. -
Just look around: everyone is joined at the hip to their cell phones and Blackberries, said Ben Morales, chief information officer at Washington State Employees Credit Union (WSECU) here, which launched free wireless banking to select groups in January.
Whereas just a sprinkling of the U.S. population uses mobile devices to bank now, adoption will increase to anywhere from 10 million to 20 million users in the few years, according to several research firms.
"Mobility and connectivity is the key to financial services in the future," Morales said.
To some, that future is just too far away to warm up to. Fairwinds CU in Orlando, Fla., dropped its mobile offering in 2003 due to "low adoption and high expense," said Charles Lai, chief information officer.
The $1.5-billion CU made a hopeful start with mobile banking in 2000, telling Credit Union Journal that it expected the service would help drive member loyalty.
Four years later, adoption never topped more than 1% of homebanking users, and each transaction cost the CU $5.01 until the last year of operation, when it dropped to $1.78, said Lai.
"We acknowledge we were early adopters, and that the pay-for model of wireless banking dissuaded many users from using it," he continued.
Though Lai hasn't abandoned mobile banking forever, he said that "right now, there is very little member demand."
At $2-billion Texans CU in Richardson, Texas, mobile banking lasted nearly five years until the CU abandoned it in 2005. In fact, the service is so dead in the water that, according to Shalissa Clary, public relations director, the CU does not have readily available records or executives to explain why wireless was discontinued.
Both Texans' and Fairwinds' stories reflect what U.S. consumers are saying: mobile access is a secondary or emergency method for banking, according to a study by Synergistics Research Corp.
People are staying away from wireless banking largely due to security concerns, which will put the service on hold for about five years, say many pundits, such as Phoenix ESP Payments Research Group and Gartner, Inc.
Back at WSECU, Morales gets that most members aren't going to immediately jump all over wireless banking.
"Are members asking for it?" said Morales. "Maybe not, but listen to what the world is telling you about this area of technology. Mobile banking is sexy and it's hyped by the big banks and everyone else. Credit unions have to position mobile banking at the introductory end of the product lifespan, target personal finance software users, and start offering it as a value-add with other primary promotions. It has to grow organically."
Security is "absolutely a legitimate concern," he added. "We tell members that the threats on the Internet will happen on mobile phones, too, but our product has MFA built-in and is as secure as downloading transactions with Microsoft Money or Quicken or using homebanking. We comply with all federal and state regulations."
WSECU's offering allows members to check balances and histories and move money between their CU accounts. An on-screen budgeting graph illustrates the member's income and expenses. Members can also send secure messages to CU agents with confidential queries, or simply text the CU for rates via the new WSECU easy-dial "short code."
But these features aren't enough to spark adoption, Morales said. The $1.2-billion will "unlock the key value for members" in 2008, during the next phase of the organic growth of mobile banking at WSECU, Morales said.
That key value? Wireless bill pay, which should increase convenience as well as adoption, he said. And at some point, the CU hopes to slip into the wireless payments network.
"We want to integrate into the payment processing stream," said Morales. "You have micro-payments happening through mobile phones with people purchasing ring tones and screen graphics. In the Philippines, a bank has developed a complete payment system through SMS with no exchange of cards or cash whatsoever. If I can do that and bypass VISA, I'll save on interchange fees."
But that's way off in the future, Morales said. "This payment opportunity is going to get bigger; we just haven't figured it out yet."
For More Information
Read more about wireless banking at cujournal.com and search the following bolded terms in the archive:
Mobile-Device Access for more on the study that shows consumers still see mobile banking as an "emergency application."
Calling Ahead, to learn how Fairwinds CU started its wireless banking venture.
Once Hot Wireless Access Seeing Few Users, for a story about Texans CU's foray into mobile banking.
For more info on this story:
* WSECU, www.wsecu.org
* Fairwinds, www.fairwinds.org
* Texans CU, www.texanscu.org
