Mobile banking is rapidly emerging as a contender for the title of fastest-changing delivery channel, with at least six financial companies expected to announce tests, rollouts, or plans in the next week.
Wachovia Corp., SunTrust Banks Inc., and Regions Financial Corp. are expected to announce plans today to use mobile software from Firethorn Holdings LLC. BancorpSouth Inc., which has been testing the Atlanta vendor's software, is expected to announce a full-scale rollout today. Related Links
Some observers said technology that lets people use mobile phones to check balances, initiate transfers, and pay bills may be reaching the tipping point, though others warn that bankers may be leaping before they have looked at the actual returns the technology could offer.
"Mobile banking is the new channel of choice," said Michael Lindsey, a senior vice president at BancorpSouth and its manager of electronic delivery services.
The Tupelo, Miss., company began testing Firethorn's software in November, and it was so popular that BancorpSouth had to stop accepting new users after 500 signed up within the first month.
Mr. Lindsey said that 80% of the users in the test said they would recommend the software to friends.
Richard K. Crone, the founder of Crone Consulting of San Carlos, Calif., said the buzz surrounding mobile banking is "reminiscent of 1995 and '96, when banks were trying to make the same decision on how to deploy online banking."
At least 54 vendors are offering products and services for mobile banking and payments, Mr. Crone said.
But despite all this attention, bankers may not have done all their homework, he said. "Universally in my travels, the thing that's missing in my talks with banks is the objective business-case analysis" for mobile banking.
Wachovia introduced a mobile service in September, using software developed in-house that lets people to monitor transactions, make transfers, and check balances. The Charlotte company now plans to expand those capabilities in October, using the Firethorn software.
"The next step was to allow access to bill-pay," said Gloria Chance, a Wachovia senior vice president and its chief e-commerce officer.
C. Eugene Kirby Jr., a corporate executive vice president at SunTrust and the head of the Atlanta banking company's retail and business banking unit, said that the mobile services it is developing "will help us pick up the Generation Y segment, which is going to be very important to our future."
He also cited bill payment as a factor in SunTrust's decision to use Firethorn's software. CheckFree Corp., an Atlanta provider of electronic bill payment and presentment services, has a deal to provide mobile services exclusively through Firethorn.
SunTrust expects to test the services in the second half with as many as 100,000 customers drawn from its 1.3 million registered online users. Mr. Kirby said that he expects to announce a commercial rollout next year, and that the services could help SunTrust win customers from competitors that do not offer mobile banking.
A Regions spokeswoman said she could not provide an executive to comment.
Visa did not respond to a request for comment Monday. Mr. Coghlan is expected to deliver a keynote address Wednesday in Orlando at the Wireless 2007 conference, sponsored by the Cellular Telecommunications and Internet Association, a Washington trade group.
In January, Visa announced that it had developed a mobile banking software suite, and executives of the San Francisco card association said they plan a series of tests with issuers over the next year.
Other financial companies are also expanding their mobile services. PayPal Inc. of San Jose, Calif., has developed a "mobile checkout" service to online merchants that offer products and services to consumers through their cell phones.
The online person-to-person payment processing unit of eBay Inc. says on its Web site that the checkout service is available now through "select merchants" online.
Amanda Pires, a spokeswoman for PayPal, said mobile checkout differs from "text-to-buy," a service the unit introduced last March that lets customers buy products using codes in magazine advertisements or other promotional materials. The mobile checkout service uses the handset's Web browser instead of text messages, Ms. Pires said.
Mr. Crone said that the potential market for mobile banking is huge. Of the four communications channels available in a mobile device, 225 million Americans use the voice service, and more than 40% of them use text messaging, but only 19% use the handsets' Web browsers, and the use of downloadable applications for financial services is negligible - a "rounding error," as he put it.
However, he warned that at this early stage of the market's development, it is unclear which approaches will take off with consumers, and that bankers should be wary of making major commitments.
For instance, bankers often cite reduced call-center expense as a benefit of mobile banking, saying that balance inquiries are the top reason customers call, Mr. Crone said. "What is the demographic, psychographic, technographic profile of a customer who interacts with a customer service representative? Some of them use the Internet, but a good portion of them do not," so they would be poor candidates for mobile technology.
