Developing business applications for mobile banking could help banks solve one of the quandaries of the emerging channel: how to make money in it.
Many individual consumers have come to expect mobile banking as an essential — and free — service as large banks push new features like mobile check depositing and bill payment, making it next to impossible for banks to add fees for such capabilities, experts said.
Justifying such fees is likely to be easier on the corporate side, said Christine Barry, a research director with Aite Group LLC in Boston.
"Corporate customers are … more accustomed than consumers to paying fees for different banking services," Barry said, though she said security issues remain a concern for corporate and consumer customers alike.
Technology vendors are beginning to seize on the business opportunity, readying new software that banks can use to market new mobile services to their treasury clients.
For example, on Monday Fundtech Ltd. of Jersey City, N.J., announced a suite of mobile corporate banking services called Mobile ACCESSplus. George Ravich, Fundtech's chief marketing officer, said a large U.K. bank that he would not name has agreed to offer the technology to customers.
Those familiar with the technology say Royal Bank of Scotland is Fundtech's first user. An RBS spokesman did not return a call for comment Monday.
Adoption of mobile banking services has grown in the consumer market, Ravich said. Businesses likewise want to perform banking on the go, so "it's an obvious extension to do it on the corporate side," he said in an interview Monday.
About two-thirds of businesses said they would be at least "somewhat likely" to use mobile corporate banking services in the next 12 months if their bank offered it, according to a survey of 319 treasury executives that Aite Group conducted and Fundtech sponsored.
About 49% of businesses said they were willing to pay for mobile cash management capabilities.
"Bank decisions to hold off on rolling out mobile banking capabilities to their cash management customers demonstrates a disconnect between bank product offerings and customer needs," Aite said in its report.
But banks face other hurdles in marketing mobile banking applications to businesses, the biggest being questions around security, such as if a mobile device is lost.
Security concerns and the complex structure of business banking relationships are likely to keep corporate treasurers on the sidelines for the foreseeable future, said Thomas Deas, a vice president and treasurer of the Philadelphia chemical company FMC Corp., which had 2009 revenue of $2.8 billion, and the president of the National Association of Corporate Treasurers in Reston, Va.
"For smaller companies that maybe have consolidated all their banking business with one bank it could work, but not for a company with multiple banking relationships that relies on treasury management services to be the interface between its treasury staff and its banks," Deas said.
David Bellinger, the director of payments for the Association of Financial Professionals, agreed.
The Bethesda, Md., trade organization has met with tech vendors and banks about mobile technology, Bellinger said. "There's a high level of interest," he said. "That's matched by a high level of skepticism on the part of corporates that the security is there."
Banks are "going to have to address … the risk and how you're going to mitigate that risk" when pitching the services to customers, said David Dove, the managing partner of Dove Capital Partners LLC, an investment and consulting firm focused on mobile banking technology.
Fundtech's applications are based on a security standard called REST, which pertains to how mobile devices connect to remote service platforms, Ravich said. "We're following a standard that's in the marketplace."
Mobile ACCESSplus includes three different applications that banks can offer to customers: a version of Fundtech's cash and liquidity management service; an application for managing electronic invoices; and one that handles a U.K. payments type called Bacs.
Fundtech's first bank customer plans to initially offer businesses the Bacs service, Ravich said.
Banks can deploy the applications for multiple mobile operating systems. Fundtech plans to charge banks an installation fee and a per-transaction fee, Ravich said.