Harris Bancorp is poised to become the first traditional U.S. bank to offer wireless banking on a broad scale.
The Chicago banking company is gearing up to make banking through mobile phones available to all its customers as soon as next week. That would give it a head start over its bigger rivals Citigroup and Bank of America, which are expected to roll out wireless phone services in the United States by the end of summer. Harris' move is seen as an important step toward establishing the credibility of wireless banking technology. Many bankers regard it as skeptically as they do smart cards, which are still struggling decades after their introduction.
Harris, a $28 billion-asset subsidiary of Bank of Montreal, says two pilots it conducted demonstrated that certain customer segments, including convenience seekers and those with high incomes, will make wireless their banking channel of choice.
During each pilot, 100 people used mobile phones regularly to gain access to their bank accounts, and more than 90% in both pilots accessed their account at least once a week. During a two-week period of the second pilot, which lasted 12 weeks and concluded last week, 100% accessed their accounts.
The tests proved "that customers were willing to subscribe to the service," said Charles Piermarini, executive vice president of mbanx U.S., a division of Harris Bank.
A major marketing campaign will be the official introduction of Harris Wireless, which customers will be able to use to gain access to banking and brokerage accounts as well as weather forecasts, horoscopes, and news. Select customers will get free Sprint PCS phones when they sign up, but the rest will need to purchase a phone.
Bank of Montreal, which formally introduced its wireless service in May under the brand Veev, has no doubt helped boost Harris to the front of the pack in wireless banking. Harris and its parent, both of which work with 724 Solutions Inc. of Toronto, plan to offer payment and aggregation services through wireless devices. Mr. Piermarini said he believes banks' access to the payments system will give them an advantage.
The ultimate goal of Harris and its parent is for their wireless offerings to become "destinations for consumers" seeking services beyond financial transactions, Mr. Piermarini said. In their pilots, Harris and Bank of Montreal found that 75% of participants used the weather forecast feature, 59% the horoscope service, and about 50% the news/sports offering.
Harris' only U.S. competition so far is coming from small institutions. University and State Employees Credit Union, with $430 million of assets, introduced wireless banking in April. Its 60,000 customers can use it to retrieve account balances, review account histories, and transfer money between accounts.
USABancshares.com of Philadelphia has signed "hundreds" of users for its Palm-based wireless banking service since rolling it out in March, said Robert Smik, director of mobile commerce at USABancshares.
Texans Credit Union of Richardson, Tex., began to offer banking and bill payment through Palm computers in May. Citigroup offers wireless services in Singapore, Hong Kong, Japan, and the Czech Republic, but does not offer it yet in the United States.
Harris discovered that consumers would rather use mobile phones than Palm Pilots. It will not offer a Palm-based service for another few weeks.
"More people have phones than have Palm Pilots, so in addressing your largest audience, wireless phones are the way to go," said Peter Friedland, a senior analyst at W.R. Hambrecht in San Francisco.
Forty percent of the participants in the Harris tests used their phones to check stock prices, 22% to check stocks placed on a watch list, and another 22% to check their account balances, transfer funds, and pay bills.
The participants, who included Harris employees, customers, and noncustomers, had above-average incomes and were active financial managers. Two-thirds said they signed up for the trial because they were always looking for ways to simplify their lives, and half said they wanted more time for relaxation.
These people were "interested in convenience, portability, and increased balance in their lifestyle," Mr. Piermarini said.
Harris also drew upon the results of Bank of Montreal's test, which was conducted in the Toronto area. Eighty percent in that test used Veev to check their balances, 63% checked their account histories, 57% paid bills, and 40% transferred money between accounts.
In brokerage transactions, 50% of the Veev test group said they checked stocks, 25% used the stock alert option, and 25% set up customized stock quotes. Less than 10% looked at market charts.
In the Veev test, 59% of the transactions took place while the participants were commuting by car or train. Twenty-one percent of the participants conducted transactions at work, and 10% at home.
Frustrations included having to dial back in when connections were cut off and slow transaction speed. The average Veev transaction lasted about 3.5 minutes.