Mobile banking use should double this year, and in order to graduate from basic balance queries and alerts to robust payment services, vendors are flooding the market with products that offer intermediate steps of usability and attractive screen appearance as the groundwork for future development.
"All of the mobile vendors offer things like balance, locations of branches or ATMs, or a means to view statements. This type of functionality is pretty well understood," said Stessa Cohen, a research analyst for Gartner Inc. "What we're going to have to start to see is ways of differentiation of offerings, a way to allow banks to deliver new apps."
To accomplish this, a number of vendors are entering into collaborative partnerships to create access to a broad swath of financial clients, provide technical scale, sell user-friendly mobile phone apps in the short term and in the long term develop full-fledged enterprise mobile financial services.
The mobile phone giant Nokia Corp. has taken a stake in the person-to-person transfer company Obopay Inc., and Visa Inc. purchased an interest in the U.K. mobile banking software vendor Monitise PLC; International Business Machines Corp. has struck separate deals with Mobile Commerce Ltd. and Sybase Inc.
These new alliances come at a time when mobile banking is growing dramatically — TowerGroup, an independent research firm owned by MasterCard Inc., has forecast that by yearend there will be 10 million U.S. mobile banking users, twice the number there were a year ago, and 53 million by 2013.
(MasterCard said this month that it would sell TowerGroup to Corporate Executive Board Co.)
Collaboration among players promises financial companies the next generation of technical sophistication and functionality, facilitated by the new style of user experience designed for users of Apple Inc.'s iPhone.
That means for some banks on the forefront of mobile deployment it's already time to upgrade their iPhone apps to make them navigate more like mainstream iPhone applications, compared with online banking sites that have just been ported to the iPhone.
Analysts say these are necessary advances in usability before mobile payments and other financial services can become mainstream.
"Replicating what's on the online side in the mobile channel is the wrong decision," said George Peabody, the director of emerging technology advisory services for Mercator Advisory Group.
Sybase's collaboration with IBM, signed in September, will allow the companies to cooperate on a mobile commerce ecosystem that aims to expand mobile payments and improve usability.
Sybase's financial clients include BBVA Compass, which is using Sybase's iPhone app to allow mobile balance inquiries and transfers. "The buttons you come across give it an iPhone app look and feel," said Cameron Franks, the director of mobile commerce for Sybase. "One of the key differences of an app versus a browser is it's easier to use the app to link to other parts of the phone."
Another vendor, S1 Corp., recently launched a new iPhone app to sell to its Postilion and Enterprise banking customers. Among S1's clients is American State Bank of Lubbock, which recently became one of the first community banks to offer an iPhone app for mobile banking.
S1 rivals Harland Financial Solutions Inc. and ClairMail Inc. have also recently completed upgrades to enable iPhone-style navigation. Harland, for example, has rewritten its screens to make it easier for people to use their thumbs for navigation.
John Meyer, a vice president at Harland, which has about 70 mobile banking clients, hopes that as more people use iPhones and Research in Motion Ltd.'s BlackBerry devices, the greater the expectation will be that banks offer sophisticated apps.
Mark Schwanhausser, an analyst at Javelin Strategy and Research, calls these iPhone-friendly mobile banking applications "wrappers," and said differentiation between mobile and Web is paramount to get consumers interested in mobile banking, and eventually using mobile devices for advanced services.
"If you make mobile banking look just like online banking and make people sign up for mobile through online banking, then consumers will say 'I'll just wait until I get home and use the Web,' " he said.
