The next big thing in mobile financial services could be context-aware computing - technology that picks up on environmental cues to deliver content to the user in the safest, most easily consumed way. For instance, a phone that understands its owner is driving in a car would automatically switch to voice-activated mode.
But are banks ready for this? "It's a forward-looking innovation now, but using the contextual information from the mobile device to deliver tailored services matching that consumer's current situation is something that most banks will start to do," says Mark Blowers, a practice leader at Ovum.
Many banks and card networks already use an introductory form of context-aware computing. ATM and branch locators allow consumers to use a mobile phone's global positioning system capabilities to find the nearest location. One of the more recent apps comes from PNC, which uses an augmented reality program to draw graphics on top of an image captured from a device's camera. PNC then draws a compass and location market on top of the user's surroundings, allowing consumers to know which local building has a PNC ATM.
Location-based marketing apps like MasterCard's Overwhelming Offers marry the GPS capability to provide users with a map of where they are at a given moment along with recommendations and special offers from nearby retailers.
"If you know someone's location, you can send them marketing content or information related to that location," Blowers says. "It's a fairly basic use, and a lot of financial institutions are already using mobile technology for that purpose."
The latest smartphones advance the concept by adding more embedded technology to the devices, which allows broad and intuitive information to be attached to the phones, and deliver added services to consumers and businesses.
New models such as the iPhone 4 and new Android models include motion sensors; speed measurements from accelerometers; expanded ways to deliver, receive and translate text to voice; and enhanced video and photography capabilities.
"There will be a greater proliferation of devices with these capabilities," says Rob Berini, a director at Deloitte Consulting. "Banking is by nature a context business. You don't use a credit card for the sake of using a credit card. You use it to buy things. It's the same with mobile. Context-aware computing will allow banks to deliver the next generation of value propositions, whether it's contextual-based discounts at retailers, or [using GPS] to aid a prequalification for a mortgage while the borrower is in an actual house while shopping for a home."
This will let banks deliver services based on where a consumer is and what he or she is doing, without having to ask first. It has ramifications for marketing, service, transaction execution and security.
One of the early movers is BNY Mellon, which is including context-aware computing capabilities from Openstream in its new treasury management app, allowing executives like fund managers to receive vocal messages instead of text messages if they are in motion.
"It's the ability to switch modality based on context, location, orientation, motion and the environment in general that's the key advancement in new context-aware computing solutions," says Phil Sheehy, director of business development for Openstream. His firm has also deployed context-aware computing at other banks in the U.S. and Europe, though Sheehy would not name them.
Openstream's software connects with the technology embedded in new mobile phones, tablets, PCs and laptops to "sense" the device's location and circumstances. That software then serves as a layer between the computing device and the bank. The bank can send out communications such as alerts, marketing, transaction confirmation or execute security protocols based on that location and circumstance.
"The new devices enable us to communicate in a multimodal way. They not only have a keyboard, but a touch screen, microphone and a camera. The device can speak to you, make tones, record your voice, capture images and allow you to use your fingers to navigate on a screen," Sheehy says.
At BNY Mellon, for example, an accelerometer determines how fast the device is traveling. This lets the bank leverage the Openstream layer to automatically deliver messages by voice using optical character recognition to translate the visual text to voice. It's a move designed to increase safety and enhance the overall experience for the user. For a customer who's driving a car, the smartphone senses that the phone is in motion and activates the voice service, giving the user the chance to approve a payment or transfer, or receive information about the balance in a specific account with the option to execute a sale or other transaction by voice.
"If you were in the passenger's seat holding the driver's phone and got such an alert, you would read the alert to the driver. You wouldn't hold the smartphone's screen over his face," Sheehy says. In the case of context-aware computing, the smartphone itself is serving as the passenger, he says.
There are also security use cases. Sheehy says that in a wireless environment, the software can sense whether the remote device, tablet or laptop is in a secure network and automatically trigger different levels of authentication or access.
"If I'm sitting at my desk and have an iPad, I'm connected to my corporate network and should be granted full access. But if I left my office and am in a coffeehouse and have access to a local wifi network, it may not be recognized as an appropriate connection, so I may have some access to my corporate network but not all."
The Guts of Context
The technology that enables context-aware computing comes in two parts, First there's middleware that enables the bank to tailor the delivery of marketing or alerts. IBM, Intel and Oracle are among the providers of such software. Second, handset manufacturers must build context-aware computing features into their smartphones and tablets.
Context-aware computing combines analysis of hard sensors of conditions such as location and speed with "soft sensors," such as memory of user preferences. The middleware also leverages multimodal delivery standards (with "modes" referring to the ways in which the device delivers information, such as speech, touch, keyboard etc.), which makes the bank's distribution device-agnostic; the institution does not have to develop or purchase separate technology to deliver context-aware services for handsets from different manufacturers or different vintages. "The devices interact with the software on the client [bank] side to be able to make certain actions or to change the customer experience," Berini says.