Mobile Banking: Get Ready for the New Zealand Invasion

June 01, 2007, 1:00 a.m. EDT 4 Min Read

Armed with a suitcase full of hypotheticals on how instant, remote access to banking accounts from mobile devices can change financial lives, technology salespeople are planning to pitch to American banks and consumers a mode of wireless remote access banking they say has worked wonders in New Zealand.

"It's about what the service does, not the packaging and the language used," says Caroline Dewe, evp for product development at Fronde Anywhere, which has outfitted New Zealand's Kiwibank with a new mobile banking platform. Dewe says the strongest selling points for mobile banking are the ease and peace of mind that come with being able to do banking anywhere, not necessarily the novelty of the technology itself, a phenomenon that often marked the early Web banking years, where the Internet itself was the star of the show. "Mobile banking's about the transaction behaviors you are trying to encourage in your customer base."

Kiwibank deployed Fronde's mobile banking platform at first for free, then for a charge that's roughly equivalent of thirty-five cents (USD) per balance request. "There was a spike in adoption when they offered it for free," Dewe says of Kiwibank, which did not provide an executive for an interview. "And even when they started charging, there was no drop-off in usage. Adoption is about getting people to register and being creative about how you get people to sign up for a new service. There's always apathy among customers at first for signing up for something that's new to them. But once they do sign up and see how beneficial it is, they'll usually stick with it."

Once the bank had made its initial connection with its customer base via balance inquiries, it began offering more advanced functions, such as bill payment, person-to-person payments and other transactions commonly found on Internet banking sites.

"They were able to acquire just the kind of customers base that banks have been trying to acquire...young people entering the workforce and the emerging wealthy," Dewe says, adding there is also demand among business customers. "And if you are traveling a lot, it can be handy to do things like approve your payroll by using a mobile device rather than other means."

Dewe says Kiwibank is making inroads with the new services, and hopes the same adoption that's happening in New Zealand can also take place in the United States, partly because the needs of the consumers are the same.

Advocates for mobile banking say the strengths lay in people being able to access information on their accounts, verify that a check has cleared, a deposit has become available or if a bill has come due. And all of this can be done even if a person is away from a bank branch, ATM or a computer.

If Fronde Anywhere wants to take the platform that's worked at Kiwi to banks anywhere in North America, it will face stiff competition from mobile banking firms such as mFoundry and Firethorn. Also active in the market is ClairMail, which has entered into a partnership with TELUS, to bring ClairMail's mobile phone technology to Canadian retail banks and credit unions.

Joe Salesky, ClairMail's CEO, says the mobile phone market, and the subsequent market for mobile banking, is expanding in Canada, particularly in areas where phone and Internet service haven't been able to meet the demands of bank customers. "Many call centers in Canada still have inefficient interaction with customers," Salesky says.

There should be a pretty good sized mobile-banking market within a few years for these firms to tap into. Bob Egan, a chief analyst for TowerGroup, says the five-year potential for mobile baking adoption in the U.S. is at roughly 25 percent of the total market for online banking.

He points to the inroads mobile banking made in places like South Korea and Eastern Europe, in addition to Kiwibank's success in New Zealand and positive feedback in focus groups in the U.S, as evidence of mobile banking's potential.

"Mobile banking activity equals 'Internet lite,'" he says, adding its appeal is in personal finance "security." Not so much security in the anti-phishing or anti-hacking sense, but in ability to track funds and have peace of mind in an instantaneous manner from anywhere at any time. "You know that your check got deposited or if a bill is due. All of these things today are mental tasks, things that you walk around with in your head."

Egan says the potential adoption for mobile banking can be seen by examining the initial development of mobile devices themselves. "Fifteen years ago, people used to ask how the mobile phone market will take off when people will be charged 75 cents per minute for a call. But there has been a need. For example, there's been a change in the workforce where both parents work in most cases. If one parent has picked up the kids, it's easier for him to contact his wife on a cell phone to pick up stuff for dinner instead of packing up the kids and taking them to the store himself."