Synovus Financial Corp. plans to offer its customers online banking services that can be accessed through mobile phones.
The Columbus, Ga., bank holding company is expected to announce Thursday that it has an agreement to use mobile banking software developed by Firethorn Holdings LLC of Atlanta. Firethorn already has struck a deal to put its application on Cingular Wireless LLC's phones.
Garry Hedges, Synovus' director of payments strategy, said he hopes to begin offering the mobile banking service in the second quarter of 2007. He said the service is the natural next step from the company's online banking service. "Virtually every human on the planet seems to carry some kind of mobile device," he said. "This adds a convenience factor to the way people interact with their financial institution."
Tripp Rackley, Firethorn's chairman and chief executive, said in an interview Wednesday that another banking company, which he would not name, already is testing a mobile service with some customers and expects to offer it on a large scale early next year.
Firethorn's agreement with Cingular, announced Wednesday, was a critical step in bringing mobile banking to the market, Mr. Rackley said. Carriers are notoriously picky about permitting new services on their phones, and "we needed a model that works for the carriers and for the financial institutions."
Carriers are looking for ways to persuade customers to use their data services, which can generate more profit than voice services, he said. "Carriers are betting their entire future on data. They want to make sure you have applications on your device that are sticky, and online banking is very sticky."
The Firethorn software lets people to check their balances, make transfers, and pay bills through a phone. The bill-payment component was made possible by an agreement the vendor announced last week with CheckFree Corp.
"It's been a big week for us," Mr. Rackley said.
Though none of the companies involved plan to charge customers a special fee to use the mobile banking service, eventually that may change, he said. "We want to get people using this."
(Cingular charges fees for using its data network, but it will not impose an extra fee for using the banking service.)
However, consumers have shown a willingness to pay for convenience, Mr. Rackley said. "Financial institutions make a lot of money on people that are too lazy to walk a block to use their ATM" and will pay a fee to use another bank's automated teller machine. "We are putting a bank in the palm of the customer's hand," and "I think there's an opportunity" to charge a fee for that.
Mr. Hedges said that Synovus has not decided whether to charge a fee, but it is a possibility.
Dan Schatt, a senior analyst for the Boston market research firm Celent LLC, said that banks will not want to charge a fee for mobile banking. "I don't think people will be willing to pay for this," Mr. Schatt said.
For the banks, the main benefit of the service could come from stronger relationships with its customers, he said. "I see this as a retention-oriented play."
Firethorn research indicates that there could be strong demand for mobile banking. Mr. Rackley said that one banking company told him about half the calls it receives at its call center are made with mobile phones; another company said that about half the inquires its center receives are from people who want to know their exact balance.
Many of these calls are from people who simply want to know if they have enough money in their account to make a debit purchase, Mr. Rackley said. "There is no way to find that out now except by calling." Mobile banking services "definitely meet a need."
