Banks all over the world offer financial services through mobile phones, but few have taken the concept as far as Jibun Bank.
The Japanese financial company has designed its services so customers can handle their finances exclusively by phone. Analysts say the model has pushed the mobile channel about as far as it can go, but they add that it would be a poor fit in most other markets, including the United States.
Started in June 2008 as a joint venture between Mitsubishi UFJ Financial Group Inc. and the Japanese telecom company KDDI, the Tokyo bank has attracted 700,000 accounts and 10 billion in Japanese yen deposits — about $112 million — and it has a target of 2.4 million accounts and deposits of 1 trillion yen (about $11.2 billion) by its third year of operations.
Though the technology could probably work in the United States, experts in this country say mobile banking is most likely to develop here as one more delivery channel, operating alongside the branch, the call center, online banking and the automated teller machine, rather than as the centerpiece of a business strategy.
Takeo Tohara, the president and chief executive of Jibun Bank, acknowledged that the Japanese market offers a special opportunity.
"Japan has the world's highest level of mobile phone penetration," with 93% of its citizens using a handheld device, Tohara said in an interview conducted by e-mail last month.
Jibun Bank plans to develop a full range of banking services and to let customers manage the entire life cycle of products and services, from account opening to account closure, on their handsets. In addition to transactions such as deposits and funds transfers, Jibun began offering credit cards in November and personal loans in December; today, its customers have access to more complex banking services such as foreign currency deposits and e-shopping payments, Tohara said.
In fact, mobile devices can handle almost every banking function, he said.
The exception is opening an account, and the bank has outsourced most of the required paperwork to a printing company. Prospective customers must request paper documents that they sign and return to the printing company, which processes the data and sends it electronically to the bank.
The business motivation for the KDDI-Bank of Tokyo-Mitsubishi venture was the opportunity to cross-sell the mobile banking service to customers of both companies, Tohara said. Bank of Tokyo-Mitsubishi UFJ has more than 40 million retail accounts, and KDDI's Au mobile service has more than 30 million customers.
Jibun Bank is using the multicurrency Flexcube core banking platform from Oracle Corp. in Redwood City, Calif.
Brandon McGee, a vice president at the Huntington National Bank unit of Huntington Bancshares Inc. in Columbus, Ohio, who blogs about mobile banking, said the partnership between Tokyo-Mitsubishi and KDDI aligned the interests of a banking company and a telecom company in a way that would be difficult, if not impossible, to recreate in the United States.
"Japan is probably three to five years ahead of the United States in mobile technology and mobile adoption," McGee said.
Huntington's own mobile adoption is running well ahead of its expectations. It took only 60 days for the bank to meet its 12-month goal for customers' use of its mobile browser, starting in July 2008, he said, and only 30 days to meet its 12-month goal for text-message banking, starting from Jan. 29.
And though mobile is most likely to function in the U.S. market as a channel, like online banking or the call center, it could play an important role at certain types of companies, McGee said, citing USAA Federal Savings Bank, a mutual savings bank that has a single branch in San Antonio yet serves a global customer base of military personnel through remote channels.
"They've been extremely successful with their mobile adoption," McGee said. Others have said that 1 million of USAA's 7 million customer members get access to their accounts using mobile handsets.
Richard K. Crone, the founder of Crone Consulting LLC in San Carlos, Calif., also said the mobile-bank model is unlikely to export well to the United States.
"I think it's much more feasible in the Japanese market because you can do everything with your phone there," he said. For instance, handsets in Japan have supported electronic payments there since 2004.
Crone said Jibun Bank reminded him of Security First Network Bank, the world's first Internet bank, which was started in May 1996.
Security First functioned as "a proof of concept for online banking," he said; its owners sold the banking operations to Royal Bank of Canada in 1998 to focus on software development, implementation and services. That company is now known as S1 Corp. of Atlanta, a maker of Internet banking software and a suite of customer-contact applications.
By the same token, Jibun Bank is a demonstration of the integration of functions, including text alerts and payment chips, on the mobile handset, Crone said.
"That's all exportable. That technology knows no boundaries in its application," he said. "If they get the infrastructure right, the next thing you'll see is a company to sell that infrastructure globally."