LAS VEGAS — A growing number of current and would-be players in mobile banking have set their sights on mobile payments as a key element of their strategy.
Though only some services have such capabilities now, momentum is building, observers say, driven by perceived interest in certain market segments and the quest for the ultimate payments tool, a digital wallet.
Several banking companies discussed plans this week to offer services through mobile devices and vendors announced partnerships to expand their capabilities to include payments. This was capped Wednesday by the news that the wireless hardware and software provider Qualcomm Inc. had agreed to pay $210 million for the banking software vendor Firethorn Holdings LLC. Some people said that deal would facilitate the use of payments made through mobile phones.
"Mobile banking is a steppingstone on the way to mobile payments," said Richard Crone, the founder and president of Crone Consulting LLC.
The most common banking use for mobile phones today is simply checking balances, he said, but people soon will want to use their handsets for more advanced financial applications. "Banks need to skate to where the puck is moving, and that is mobile payments."
Early reports from bankers show that mobile banking is taking off extremely rapidly. Bank of America Corp., for example, said Wednesday that it had enrolled almost 500,000 active users for its mobile banking service since launching it in May. (B of A defines an active user as someone who has accessed the service at least once in the past 90 days.)
Douglas G. Brown, a senior vice president in B of A's e-commerce unit, said in a presentation Wednesday at the Bank Administration Institute's Retail Delivery conference here that 90% of the people who have signed up for the service have remained active.
However, most people are using the service for information, such as checking balances or viewing their transaction history, rather than for transactions, he said.
George Tubin, a senior analyst with TowerGroup, a Needham, Mass., independent research group owned by MasterCard Inc., said that B of A probably has more mobile users than all other banking companies combined, and that the use of its service has been growing at about 215% a month since May.
In the third quarter 99% of the users of B of A's service checked their balance with their mobile phones, and 87% looked at their transaction history, he said. However, he agreed that few people are using the service for transactions; only 10% initiated an account-to-account transfer with it, and 5% paid a bill.
Bob Egan, the director of TowerGroup's emerging technologies practice, said that mobile technology could enable electronic payments to people who rely mostly on cash, such as baby-sitters or gardeners.
"When we talk about mobile banking, we're talking about creating a whole new payments market," he said.
Mr. Crone said informational services are just the first step toward encouraging people to conduct transactions with their phones. Bank call centers have long experienced spikes on days when many people get paid and want to confirm that their paychecks have posted, he said.
Bankers could send out text alerts on those days with customers' current balances, Mr. Crone said, and once people are accustomed to receiving such notices, it would be easy to include a notice that a certain bill is due and to ask if they want to pay it through their phone. "Banks need to develop actionable alerts."
Joseph Salesky, the president and chief executive officer of ClairMail Inc., said his company is developing such a "mobile lockbox" service. "The key to success in mobile banking is to do something you can't do online, which is to reach the customer."
ClairMail has banking companies signed up to use the system, Mr. Salesky said, though would not identify them.
Ilieva Ageenko, a senior vice president and the director of emerging applications at Wachovia Corp., said in a presentation that it plans to add text messaging to its lineup of mobile offerings.
"We are looking at mobility as a new distribution channel that has powerful and flexible features," she said.
Red Gillen, a senior banking analyst at the Boston research firm Celent LLC, said that some bankers expect mobile phones to eventually store information on multiple payment accounts, and that people will be able to make purchase with any of them using built-in contactless capabilities.
"The end game is proximity payments," he said, though this is likely five years or more away.
