Mobile phone banking vendors say that one of the technology's main draws is its ability to reduce call-center costs while raising debit volume, and bankers say early tests seem to show that is exactly what is happening.
Several companies are promoting the software. At least eight banking companies are testing the systems now or plan to do so in the near future.
The software is designed to offer most of the features typically available through online banking systems, including transfers and bill payments. However, developers say one of the most common uses likely will be something much more simple: finding out an account's exact balance before deciding whether to use a debit card for a purchase at the point of sale.
Michael Lindsey, a senior vice president and the manager of electronic delivery services for BancorpSouth Inc., said that many of its customers who are testing its mobile banking software have said they previously would have called the Tupelo, Miss., company to check their balance.
"A lot of customers have said they can serve themselves faster through the mobile banking application than they could using the cell phone to call our '800' number," he said.
At least according to anecdotal evidence, Mr. Lindsey said, some of these customers are using their debit cards after using the mobile service. "We would definitely like anything that would increase our debit card use. We're hearing very positive comments from people."
BancorpSouth tested mobile software from Firethorn Holdings LLC from mid-November to the end of December with about 300 customers. Though Firethorn is still compiling data from a survey of those customers it conducted last month, so far the results have been promising, Mr. Lindsey said.
He was careful to say that the findings to date are very preliminary, and that he does not expect any significant change in overall call-center or debit volume, given the size of the test group. However, for some customers, "it could be a replacement for voice-response calls."
However, vendors have claimed in the past that new technology would reduce customer calls, Mr. Lindsey said. "We went down that scenario when we put in Internet banking," about a decade ago, and the call center still gets about 1.5 million calls a month.
BancorpSouth plans to begin offering the mobile banking service to all of its online banking users this quarter. The test ran on handsets offered by Cingular Wireless LLC, which has agreed to support the Firethorn software. When BancorpSouth rolls out the software on a large scale, it will still work only with Cingular phones, unless Firethorn can sign up additional carriers, Mr. Lindsey said.
(The vendor has said it is in talks with all major carriers, but has not yet announced additional partners.)
The service also will include bill-payment capabilities provided by CheckFree Corp.
Mr. Lindsey said his company will not charge a fee for the service, though he does not expect it to cut into overdraft fee income.
BancorpSouth already provides customers with "alternatives for them to find if they have a balance in their account, and offering Internet banking and things like that have not been a deterrent in the past from customers spending more money than they have," he said.
Synovus Financial Corp. said in November that it would offer the Firethorn software to customers this year.
Last month Wachovia Corp. unveiled a mobile service it developed internally, and Citigroup Inc. expects to introduce one this quarter.
Small companies also are testing or planning to offer mobile banking products, including the $1.7 billion-asset Broadway National Bank of San Antonio, which is using software from TRG Mobilearth Inc. of Vancouver.
HopFed Bancorp Inc.'s Heritage Bank of Hopkinsville, Ky., has been testing mobile phone software from Online Resources Corp. and Access Softek Inc. since October. Online Resources made the software widely available Tuesday and said two other banking companies have been testing it since July.
Two employees of Heritage, which also uses online banking software from Online Resources, tested the phone software. "They would just use that product every day or every other day, whatever their needs were," said Michael L. Woolfolk, HopFed's chief operating officer and executive vice president.
Mr. Woolfolk said he expects mobile banking to help his company stand out from competitors. "This is going to be something that no one else in the area is offering."
Most of Heritage's 18,000 checking customers live in rural areas, and just 3,500 bank online, he said.
Like Firethorn's product, Online Resources' is designed to be downloaded to cell phones. Firethorn's product stores some data on the phone to let users check their balances when they have no signal, but Online Resources' removes all customer data at the end of each session, for security reasons. (Firethorn says users can erase their banking data remotely if their phone is lost or stolen.)
Matthew P. Lawlor, Online Resources' chairman and chief executive, said all three of its tests have been small. "The purpose was not to do a market test. It was more testing the viability of the system," and his company tweaked its system as the tests went on.
"The question we did not answer is 'Does Mikey like the cereal?' " he said. However, the three companies testing the software plan to offer it commercially. Online Resources is offering it to all of its bank clients, and Mr. Lawlor said he expects the software to quickly gain favor with users.
The software works on mobile devices running the Windows Mobile, Blackberry, and Brew operating systems, which about 70% of all mobile phones use, he said. The software is downloaded in much the same way as a ringtone, so all carriers allow it, he said. (Sprint Nextel Corp. of Reston, Va., had an approval process, which Online Resources passed at the end of the summer.)
Dan Schatt, a senior analyst for the Boston market research firm Celent LLC, said he has looked at the Firethorn and Online Resources products, and "both are pretty impressive starts to mobile banking."
They offer similar features, and "in their first iterations, we're not going to see any distinctive differences," though banks can determine which features to offer their customers, he said.
The size of some of the banks that have committed to this software is interesting, Mr. Schatt said. "Even the smallest banks are seeing an interest from their consumers in doing mobile banking."
Heritage has said it hopes to charge for its mobile service, but Mr. Schatt said, "At the end of the day it's going to need to be something that's offered for free. It's an extension of the online banking application. It's going to be hard to charge consumers for it."