Despite the growing popularity of smart phones and the dedicated financial applications that let them handle a variety of financial transactions, many banks remain committed to basic text messages.
Text messages, their advocates say, offer a one-size-fits-all service because they work on almost every phone available.
South Plains Financial Inc.'s City Bank of Lubbock, Tex., is planning offerings for Apple Inc.'s iPhone and Research In Motion Ltd.'s BlackBerry devices, but has no plan to drop its interactive text message alert service.
"People want just a little bit of information, and they're going to make a decision on that," Jim Simpson, City Bank's vice president of information technology, said in an interview Friday.
"They don't want the whole enchilada. If you try to give them the whole enchilada, they're going to back off."
City Bank uses software from ClairMail Inc. to provide text alerts to customers; people can respond by text message or through other channels.
The Texas bank rolled out its mobile banking system in October but began researching it early last year. "At that time — this was before the iPhone took off — folks were into ring tones and texting," Simpson said. Rather than try to force complexity on the mobile environment, City Bank worked within mobile phone users' existing habits to "put banking into what's successful," he said.
City Bank has enrolled 3,400 of its more than 30,000 active online banking users in the text message service. (It defines an active user as someone who has banked online within the prior nine months.)
Mobile banking is only available to City Bank's online banking users, though Simpson said his company may expand that to others as smart phones' capabilities improve. "There's going to be a demand for the service from individuals who don't sit down at a PC," he said, but a more complex interface than text messaging is still needed to enroll in City's implementation of the service.
Joe Salesky, ClairMail's founder, chairman and chief executive, said that banks' continued interest in text-messaging helped boost his company's revenue 200% in the second quarter from the year earlier, though the company would not give exact figures.
The appeal of alerts, compared to gaining access to a bank's Web site through a mobile phone's browser, is that texts are not "an extension of online banking but more the opportunity to proactively engage the customer," he said. "When I'm sending an alert, I'm now beginning a conversation with you."
Salesky said his company's revenue growth shows that banks are more interested in text messaging.
"Banks are no longer in the early-adopter phase," he said. "This is getting to the larger sector of the market."
Salesky said that mobile banking could appeal even to people who have not embraced online banking. Text message alerts are much more effective than e-mail alerts, even if the e-mail alerts are sent to a phone, he said.
"Mobile e-mail adoption continues to go on, but the challenge you have is that the open rate of e-mail is still much lower than the open rate of" texts, he said. "There's something very personal about a text message."
Nick Holland, a senior analyst at Aite Group LLC in Boston, said that text message alerts remain popular even though most phones today are capable of much more.
"Certainly the iPhone or the app-store model is shaking things up a lot," he said, but "text messaging is kind of a fundamental of mobile banking. It's the only way you can get an alert out from the bank to the end user" in a way the customer appreciates.
Other options lack the coverage of text message services or are perceived by the user as rude, Holland said. "You could phone them, but that's a bit intrusive, and e-mail isn't ubiquitous on phone."
Though Holland said only so much can be learned from ClairMail's earnings because it has released almost no figures, he said increased demand at the company makes sense.
"Apparently it is growing," he said, which runs counter to the trend for technology budgets to be frozen in response to the recession. Mobile banking investments may continue because, especially when focusing on text, "it is relatively cheap to deploy based on the complexity and the number of channels you want to have."
