Citi's Mobile Picture to Get Sharper

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After years of evaluating a wide range of mobile banking applications separately, Citigroup Inc. is starting to link the pieces together.

Citi has teamed up with at least five technology partners to figure out what banking services people really want to access with their mobile phones, and how to make it happen.

Marylou Dowd, a senior vice president with Citi Mobile, said the massive company's separate divisions have been operating on their own, forging their own vendor relationships to develop different mobile tools. But in recent months Citi has tried to consolidate its efforts, culminating this summer in a reorganization of its Internet and mobile groups.

With mobile banking, "there is a cohesiveness and a cooperation now … our goal is truly to bring this together," Dowd said in an interview Tuesday. "The silos have been crumbling, if you will — which is a wonderful thing."

Linking applications that have, until now, operated separately is more likely to make Citi's mobile technology appealing to customers and tech-savvy prospects, which could increase retention and potentially attract deposits.

Dowd said a key part of this effort has been realizing that the new channel is very different from its closest relative, online banking. "Mobile banking is not a direct duplicate of online banking," she said. "A customer on the go has different needs than a customer sitting in front of the browser."

The first tangible result of this unified effort came last week, when Citi updated its mobile banking application for Apple Inc.'s iPhone. The previous version provided extensive transaction histories for bank accounts, but only balances for linked credit card accounts.

The updated version lets customers see credit card transaction details as well, the first time both functions have been available through the same applications, Dowd said.

The iPhone app is a collaboration between Citi's internal team; the vendor mFoundry Inc., which also developed the mobile banking application Citi introduced in 2007; and Mobile Money Ventures, a joint venture between Citi and the South Korean wireless carrier SK Telecom Co. Ltd.

Citi's credit card unit already offers a card management service for mobile phones through a partnership it announced in 2008 with Qualcomm Inc.'s Firethorn Holdings LLC.

Dowd said Firethorn was not involved with the iPhone app, and that Citi is re-evaluating that partnership. Over the next six to eight months Citi expects to revisit "how we will work with Firethorn going forward," depending in part on internal changes at the vendor, Dowd said. She would not elaborate and a Firethorn spokeswoman would not comment on its relationship with Citi.

Though Citi's mobile banking strategy is becoming more focused, Dowd said the mobile payments picture is much less clear.

Last week the company's Mobile Money Ventures unit announced plans to develop a person-to-person transfer service using technology from CPNI Inc. of Toronto.

Other parts of Citi have been evaluating similar capabilities since 2007, in collaboration with the mobile payment provider Obopay Inc. Dowd said the Obopay test concluded this summer, and Citi is evaluating the results.

With mobile payments, "everyone's out there looking to see what is that right solution. I don't think anyone's got the answer yet," Dowd said.

Aaron McPherson, a research manager for payments at the research firm IDC Financial Insights, said Citi's decision to explore multiple options is wise, considering that there are at least five distinct uses for mobile payment services.

Two of them involve only consumers and their wireless carriers, such as purchasing ringtones, and do not involve banks.

But three offer more opportunities for banks to develop consumer services, and McPherson said Citi is involved in all of them.

The CPNI transfer system facilitates bank-to-bank transactions, moving money from one person's account to another. Mobile Money's previous efforts with SK Telecom are categorized as bank-to-carrier transactions, because payments can get handed off from a bank to a wireless provider. The final format involves third parties, such as Obopay or PayPal Inc., which operate their own payment ecosystems that are funded by transfers from a bank.

"Whichever model ends up being successful in the U.S., … [Citi] will have a version of that," McPherson said.

The third-party model has caught on faster in the United States, largely because the other approaches have been slowed by business hurdles, McPherson said. "The banks are so fragmented and competitive here that it's hard to get them to cooperate," he said.

Still, third-party systems such as Obopay and PayPal (a unit of eBay Inc.), might eventually lose ground to bank-to-bank systems that are more convenient for users, McPherson said.

Jay Bhattacharya, Mobile Money's vice president of sales, said that regardless of what Citi decides for the U.S. market, CPNI's technology will likely have a place within the company's global offerings.

"Citi will look to P-to-P across all of its regions," Bhattacharya said. "This will become a very, very viable and attractive option for business managers."

Rusty Carpenter, CPNI's general manager for the United States, said the trend he has seen in the is that banks begin with a mobile banking application, then try to upgrade it to mobile payments. He said his CPNI's technology will work with any payment system a bank wants to use, including the automated clearing house system, wires, debit and credit payments.

"It's a bank-centric model that leverages the existing infrastructure," he said. "The last thing that we need in the U.S. … is another set of payment rails specific to mobile."

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