Community banks are moving rapidly into mobile banking, using technology from the same vendors that dominate the core banking market.
Unlike the big banking companies that have introduced mobile services in the past year with software developed in-house or by small specialists, many community banks say they prefer to work with the core providers, which have taken on the difficult task of integrating mobile software with processing applications.
The vendors say the integration makes their applications easy to implement and has led to a quick uptake by small banks. The top five core processing providers say nearly 200 community banks and credit unions are using their mobile services or plan to start doing so.
Lone Star Bank of Pharr, Texas, introduced a mobile banking service in November using software from its core banking vendor, Jack Henry & Associates Inc.
Roger Leblonde, a Lone Star executive vice president, said that he had little interest in adapting mobile products from another company to run with the Jack Henry software.
Integration into back-end processing systems “is the hardest thing to do,” Mr. Leblonde said. “Who’s going to pay for that? That’s always going to be an issue.”
By working with Jack Henry, “there’s no third party involved,” he said. “If I’ve got a problem, I’ve got one ‘800’ number to call.”
Jack Henry said last week that 54 of its core customers had signed up for its goDough mobile service, which uses the browser in handheld devices.
Debbie Wood, Jack Henry’s general manager of marketing and industry research, said small banks are very interested in mobile services. “Everyone is concerned about having it and being able to offer it to their customers.”
Timothy J. Lockwood, a senior vice president and the chief information officer at United Community Financial Corp. in Grand Rapids, said it introduced a mobile service in October after asking its core provider, Fiserv Inc.’s Information Technology Inc., for such an application for more than a year.
Last week Fiserv announced its Premier Mobile Banking offering, which also uses browsers. Jamie Deterding, a senior vice president at the company’s ITI unit and the general manager of its e-solutions group, said that 25 companies are using the service, and 40 more are planning to do so.
Fiserv and Jack Henry developed their mobile browser technology in-house, but the other three struck deals to integrate technology from smaller companies.
Fidelity National Information Services Inc. is working with mFoundry Inc., Metavante Technologies Inc. has created a joint venture with Monitise PLC, a British mobile banking technology company, and Open Solutions Inc. is using software from MShift Inc.
Virginia Garcia, a research director at TowerGroup, an independent research firm owned by MasterCard Inc., said mobile banking is on the path to becoming a standard offering for banks.
“It’s a good barometer of market readiness when the core vendors get involved,” she said, and their services will help thousands of small companies reach customers through their phones.
Not all small banks are using mobile technology from their core provider. Sutton Bank of Attica, Ohio, uses core software from ITI but is testing a mobile service from the Metavante-Monitise joint venture, Monitise Americas LLC.
Tim Turmelle, the executive in charge of Sutton’s Greenlink Payments division, said it plans to introduce the service, which uses a downloadable application and text messaging, on April 15 for its prepaid cardholders and within a few months for retail customers.
Sutton also uses Metavante’s NYCE electronic funds transfer network to process transactions with its Greenlink prepaid cards, which employers use to pay unbanked or underbanked workers. Mr. Turmelle said NYCE’s payment capabilities could offer long-term advantages in the mobile banking market.
“We don’t think [mobile] payments will be here tomorrow, but in the long term, interbank [funds transfers] is going to be very important, so an EFT backbone is going to be very important.”
