Several banks have rolled out mobile banking services in the past year, but the emerging delivery channel is about to get its biggest push to date.
Wachovia Corp. and SunTrust Banks Inc. are introducing services today, joining a long list of companies that are encouraging customers to bank through their mobile phones. And, in what will likely be the highest-profile initiative, AT&T Corp. is poised to introduce two handsets that will include preloaded mobile banking software, which it expects to put in the hands of 500,000 people by yearend.
Several bankers said that AT&T’s marketing push is one of the clearest signals yet that mobile banking may be ready for mass consumption.
A score of financial companies have unveiled mobile services, with many more planning to do so soon, and observers say that the technology’s rollout has been one of the fastest introductions of a new banking channel ever. However, they also note that all this activity has been driven by the banking companies, and actual use, though expected to take off rapidly, is still quite low.
“All the things we’ve been talking about, all the things we’ve been pontificating about for the last year, they’re really going to happen for end-user customers,” said Mark Collins, the vice president of consumer data applications at AT&T Wireless, of Bedminster, N.J.
AT&T, the nation’s largest wireless carrier, began touting the banking service this weekend in stores nationwide, and online and print advertisements are expected to begin today.
Mr. Collins said the phones, featuring banking software from Firethorn Holdings LLC, will be available in time for the holiday season. He would not name the specific models, but said they can also play downloaded music. AT&T expects to ship 10 million of the handsets in 2008, and Mr. Collins said that the Firethorn application is also available for download onto 30 million mobile phones currently in use.
The AT&T campaign is scheduled to begin formally Tuesday at an event in Las Vegas at the Bank Administration Institute’s Retail Delivery conference. With several other companies expected to announce developments at the show, mobile banking is generating hopeful buzz as one of the hot delivery channels of this year. But even though the technology is moving fast, customer adoption has not kept pace.
Nick Holland, a senior analyst at the Boston research and advisory firm Aite Group LLC, said the rapid adoption of mobile services is unprecedented within the industry. He has projected that 35 million people will be using mobile banking service by 2010. However, he also said that the number of people doing so now is negligible. “The devices are up to speed. The networks are up to speed. The question is whether the consumers are up to speed.”
At last year’s Retail Delivery conference, Synovus Financial Corp. became one of the first banking companies to discuss the notion of using mobile devices for financial activities, using software developed by Firethorn.
Tripp Rackley, Firethorn’s chairman and chief executive, agreed that mobile banking systems are ready for business, and that his bank clients are trying to get people to use them.
“This industry is not about technically proving that we can make this happen. It’s about driving user adoption,” he said.
Some companies that have introduced mobile services since last year’s conference include Bank of America Corp., Citigroup Inc., and BancorpSouth Inc.
Last year Wachovia introduced a version that uses the browsers that come with many phones. Today the Charlotte company plans to introduce a version that uses Firethorn’s software.
SunTrust also plans to introduce a service today. It kicked off its own promotional effort over the weekend, handing out materials to fans at the University of Georgia’s football game against Auburn University.
C. Gene Kirby, an executive vice president at SunTrust and the head of its retail and commercial banking unit, said the Atlanta company is aiming its marketing at mainstream consumers, with event marketing at football games, Nascar events, and marathon races.
“To me, this is the natural evolution of Internet banking,” Mr. Kirby said. “It’s even more convenient, because you don’t have to be sitting at a PC.”
SunTrust also sees a competitive advantage in being a first mover in the mobile market, he said. “We believe at this early stage we could attract some new clients.”
Ilieva Ageenko, a senior vice president at Wachovia and its director of emerging applications, said that it “shares a very large footprint” with AT&T. “In some markets, it will be AT&T and Wachovia only.”
BancorpSouth was one of the first to bring mobile banking to market, beginning a pilot test with AT&T last November and introducing the service commercially early this year.
Michael Lindsey, a senior vice president at the Tupelo, Miss., company, and its manager of electronic delivery services, said it is pleased with the reaction so far.
“We were early to the table,” Mr. Lindsey said last week at a New York roundtable meeting sponsored by Aite Group. “We’d rather be early than late.”
However, neither he nor any of the other bankers interviewed for this story would say how many customers are using the services.
One surprise at BancorpSouth was a 20% increase in customers paying their bills online through mobile devices since its service went live, Mr. Lindsey said. He expects that in the future, the mobile channel will be viewed as a system not just for checking balances or receiving alerts, but also for conducting transactions.
Other bankers see other opportunities in the mobile market.
Brandon McGee, a vice president Huntington National Bank, a unit of Huntington Bancshares Inc. of Columbus, Ohio, said at the roundtable that the “stickiness” of mobile banking could encourage a customer to stay with a bank instead of leaving it, opening the chance to capture fees for such things as insufficient funds.
“If mobile keeps the customer with you six months longer and you get one NSF, that’s tangible revenue to your bottom line,” said Mr. McGee, who blogs about mobile banking but who would not discuss Huntington’s strategy.
Mr. Rackley said Firethorn ultimately envisions a completely integrated banking and payment system accessible through a mobile device, featuring loyalty programs and discount coupons, among other programs.
In the near term, he predicted that mobile bill payment would open up a new category of electronic payees for face-to-face transactions, such as gardeners or babysitters.
“I’m standing in front of them. I’m not at my computer,” Mr. Rackley said. “I don’t have to have cash. I don’t have to write a check. I don’t have to go to the ATM.”
The service also could help busy parents keep up with their bills while waiting for their children to finish after-school events, making use of time they otherwise might spend browsing through magazines, he said. “The soccer moms are going to go crazy about this.”
