There's no shortage of hype surrounding mobile banking, and there is even some impressive early consumer adoption. But what's been sorely lacking in U.S. deployments is a revenue model; so far, the channel's been a money pit for the institutions leading the charge on implementations.

Maybe it doesn't have to be that way. Case in point: Holding company ANZ National Bank, which owns two banks in New Zealand, The National Bank and ANZ. Both have been charging for mobile services-as have all their competitors-since they went live more than a year ago with the offering, powered by New Zealand-based M-Com's triple-play platform. Customers of The National Bank, the higher-end brand, pay twenty-five cents per text message or inquiry to receive balances or mini-statements.

Customers of ANZ, the more blue-collar brand, pay $2 per month for text banking services including balances and mini-statements showing their last 10 transactions. If customers of ANZ want transactional mobile banking they pay another $2 per month, and use M-Com's Java application, which enables a "pay anyone" feature, bill pay and funds transfer between accounts, along with balance inquiries and statements. In addition to the monthly recurring cost, customers pay twenty-five cents per payment to send money to another person's account, and twenty-five cents per alert they sign up to receive.

About 60 percent of those who have signed up thus far were already Internet channel users, a number the bank expects to settle at about 50-50. That means the bank is having strong success diverting customers from other more costly channels, primarily the call center. "The 18-to-24 segment was putting a lot of pressure on our contact center for purely transactional queries," says Robert Mark, channel manager for the mobile and phone channels at parent company ANZ National. "So we're saying if we could get 10 percent of our customer base using mobile banking, that could take two to three million calls out of the contact center per annum."

In addition, ANZ customers who have migrated to the mobile channel show lower churn rates. "If they're frequent users of mobile, churn drops to five percent," Mark says. "Normal for that group is 10 to 15 percent." The bank won't say how many of its one million customers between 16 and 55 years old have signed up for mobile banking, but "percentage-wise, we're probably slightly ahead of BofA or Chase," he says-pretty impressive given that his customers are paying.

Mark has some thoughts on how the New Zealand market differs from the U.S. First, Kiwi's are comfortable with the "pay anyone" service that allows them to send money to another individual's bank account simply by entering the other person's account number.

As a financial services market, New Zealand is more advanced than the U.S., but also a fraction of the size. Both of these factors may contribute to the success of the revenue-generating model for mobile banking. But M-Com, which recently announced a deal to be Washington Mutual's mobile banking provider, says there's a business case for mobile banking in any country. "The business case for mobile banking is twofold: You can charge for it, and it brings transaction fees; second, you can migrate customers off more expensive channels," says Serge van Dam, head of marketing for M-Com. "I can demonstrate on both sides how you can make money. [U.S. banks] have chosen not to, and then complain about it."

Van Dam suggests that U.S. banks start now by charging customers who are non-Internet bankers to use the service, and then as they add bill pay, pay anyone, international remittances, they can add per-transaction fees. But U.S. analysts are skeptical that U.S. banks could reverse course now and start charging.

"The freebie genie is out of the bottle in the U.S.," says Celent's Red Gillen, who covers mobile banking. "It's going to be free for informational banking services, like balances, or transaction history. There's such a close similarity to online banking. ...But bill pay might be different." (c) 2008 U.S. Banker and SourceMedia, Inc. All Rights Reserved.

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