Two vendors rolling out software designed to turn mobile phones into banking devices say some financial companies will start offering online banking through their products in the next few months.
Though any phone with an Internet browser can access bank Web sites, spotty reception can make it difficult to use them to initiate payments or check balances, and there are concerns about transmitting account data over wireless signals.
But Firethorn LLC and Yodlee Inc. say that their software addresses these issues, and that banks are eager to establish themselves in the mobile market.
Tripp Rackley, Firethorn's chairman and chief executive, says that financial companies and mobile carriers are impressed with the Atlanta company's approach, which treats banking data like e-mail and delivers it securely when the signal is adequate.
Firethorn is working with several carriers and has signed contracts or letters of intent with multiple top 100 financial institutions, Mr. Rackley said. He would not name any of the companies, but he did say that he expects to announce at least one deal next month, by which time the first customer should have the software up and running.
Yodlee, of Redwood City, Calif., is expected to announce the availability of its own mobile phone banking software today and says at least one customer will begin using it in January.
Aashir Shroff, the senior product manager for Yodlee Mobile, said that some companies have tried to offer mobile phone banking in the past, but that the market was not ready.
Five years ago "the consumers just really weren't using their mobile phones to get stuff off the Web," she said. Now, Yodlee believes that "the arena is starting to open up again."
Mr. Rackley said previous efforts did not take off because they did not address both the technological problems and the issues involved in working with mobile carriers. In earlier attempts, "you've either understood the telecom side or the banking side, but you didn't understand both of them."
Carriers are notoriously reluctant to allow outside services to clutter their handsets and monthly statements, he said, but they could be swayed by the idea of increasing their revenue by increasing data transmission traffic. One thing Firethorn is trying to do is encourage carriers not to add any fees for using a phone for online banking, he said.
Firethorn also is encouraging banks not to add fees for using a mobile device. Mr. Rackley said that banks should make their mobile banking service match their standard online services, offering things such as balance inquiries for free but charging a fee for such value-added features as emergency bill payments.
Mobile banking services could actually save banks money by reducing volume for call centers, he said; one bank he has been talking with said that 51% of its balance-inquiry requests come from cell phones.
Firethorn's software is designed to work in the same manner as Research in Motion Ltd.'s BlackBerry devices, by making online banking sessions function like e-mail sessions, but will work with any current phone model with data transmission and SMS capabilities.
The software lets a phone download account information only when it has a clear signal. If the signal does not remain strong enough to deliver banking instructions, such as a bill payment or account transfer, the phone will hold on to the data until it can be uploaded to the bank's site.
The phone does not permanently store any personal data, so it cannot be used for banking if it is lost or stolen. "We don't store anything sensitive," Mr. Rackley said, though the phone will hold on to some information, such as account nicknames and some balances, because "we want this to be available 24/7."
Firethorn's software uses a digital certificate and personal identification number to authenticate users; Mr. Rackley said he did not want to emulate what banks use online. The data on the phone can be erased through a bank's Web site if it is lost or stolen.
The Firethorn software is similar to a system that BankBoston Brazil developed with Nokia Corp. and International Business Machines Corp. to work in a country where both landline and cell phone access is often unreliable. (Banco Itau Holdings Financiera SA bought BankBoston Brazil in August from Bank of America Corp.)
BankBoston began offering phones with the system in January to business customers, while the Firethorn software is meant to run on consumer handsets.
Yodlee's software, which uses a phone's Web browser to access banks' sites, is available in two versions - one that allows transactions and another that allows balance checks but not transactions. The software is designed to work with the security features that banks have in place already.
Peter Hazlehurst, Yodlee's senior vice president of product development, said the mobile banking enrollment process for banks with strong authentication "would be a little bit of a pain the first time," but "it's a relatively small burden for a one-time thing."
