Clairmail Inc. and VeriSign Inc. are expected to announce today that they have combined their mobile banking products to offer interactive cell phone alerts on a hosted platform.
Clairmail, of Novato, Calif., offers a two-way alert product that lets people receive notices from a bank and respond to them using their mobile phone, a capability that banks say is increasingly important. However, banks must run the software on their own systems.
VeriSign, of Mountain View, Calif., offers a hosted, one-way alert system that sends notices to mobile phones. It and Clairmail say that together they can provide the two-way capability that banks have said they want and handle the hosting duties that many would rather avoid.
Two top-10 banks, which the vendors would not name, plan to test the combined system in the fourth quarter and roll it out on a larger scale next year.
"This isn't just a PR partnership," said Brian Matthews, the vice president for enterprise solutions at VeriSign. "The traction that we're seeing in the marketplace is huge."
David Thompson, Clairmail's vice president of marketing, said 40% to 50% of the top-30 banks he has talked with do not want to host the messaging software. That "took me a little bit by surprise," he said. Large banks typically prefer to have full control over the applications they use.
Before partnering with VeriSign, Clairmail's "only option really was an on-premise solution," Mr. Thompson said.
VeriSign, conversely, offered a hosted banking alert system, but Mr. Matthews said it lacked many of the features of the Clairmail offering. VeriSign's software provides "one-way interaction … alerts and notifications," he said, which was more popular in Asia and Eastern Europe than in North America.
"With the partnership with Clairmail, we're really adding the two-way interaction," Mr. Matthews said. It is "truly an expansion of our existing capabilities," he said, and banks were telling Clairmail they wanted that level of interaction.
Clairmail's system sends messages to a customer's cell phone whenever, for example, an account balance falls below a certain level or a bill is due. People can respond by text messages, telling the bank to transfer funds into an account or execute the bill payment. Interactive alerts are "what's really resonating with the banks," Mr. Thompson said. "That's what's going to drive user adoption."
Clairmail also has a version that runs through a downloadable application on mobile phones or through the mobile devices' standard browsers.
Mr. Thompson said that some banks had expressed interest in a hosted, two-way service, and the two companies decided it would be easier and faster to build one together than on their own.
Also, Mr. Matthews noted, many banks "don't have a lot of experience running a lot of large transaction systems where they're working with the carriers."
Red Gillen, a senior banking analyst for the Boston market research firm Celent LLC, said that "from a Clairmail perspective and a VeriSign perspective, it's a step in the right direction."
Both companies have a strong background in text messaging, sometimes called short message service, or SMS.
At Clairmail, "they placed their bets on the SMS horse a while ago," Mr. Gillen said. "They have a lot of recognition for being an SMS solution provider."
And VeriSign is a major text-message service aggregator, he said, so it is a recognized distributor of such services.
Many banks are likely to include text messages in their mobile strategy, but most will also want to use something more advanced, either through the browser or through downloadable software, which can offer more complex banking functions, Mr. Gillen said.
"If you look at the banks that are out there, there is only one that I'm aware of" — JPMorgan Chase & Co. — "that has live mobile banking that is SMS-based, and I don't think that's going to be the case for long," he said. "It's not sustainable."
But the more robust services will not replace text, Mr. Gillen said. "SMS has a role to play, there's no doubt about that."
He said he too was surprised that large banks want to outsource the hosting of such a service, but it may speak to the fact that the mobile banking market is still evolving.
"Maybe because the mobile channel is fairly new, the banks aren't sure where they're going with it yet" and are not ready to invest in the infrastructure, he said.
By letting VeriSign host the service, banks can offer the service quickly, but will be able to change it more easily later if they want.
