Is that a wallet in your phone (part 2) ?
In what seemed like a nearly orchestrated set of of announcements starting about 18 months ago, several major US banks announced extensions of their online banking to a mobile device. The list included Bank of America, Citibank, Wachovia, Wells Fargo, and SunTrust among others.
While the functionality offered (account balances, transfer between accounts, bill pay, etc.) was not really revolutionary, the approaches taken by these banks are slightly different. Whereas Citibank and Suntrust have you download an application on to your mobile device, others like Wachovia and Bank of America make you point your mobile browser to a special URL to start accessing the functionality. Basically, they fall pretty clearly into the those old chestnuts of mobile applications - mobile browser and downloadable application.
Of all the major banks in the US offering this type of ‘mobile banking’, Bank of America has been pretty actively reporting the adoption rate - reaching their one millionth unique active mobile banking customer (Citigroup claimed to have 30,000 users in March 2008). BoA report close to 100,000 users/day on peak days. Just for some perspective, BoA has about 25 million online banking users, which means they managed to move about 4% to try mobile banking in one year. And that is with a mobile browser !!
The same BoA release talks about “two-thirds of Bank of America’s mobile bankers are under 35 years old and four-out-of-five are under 45 years old, as Gen Y and X consumers who have embraced mobile web technology are similarly driving mobile banking usage.”
And yours truly (long-time BoA customer) was one of those who gave it a try when it was first announced. However, I have never used it since the first day I tried it - I never was in a situation where I had to whip out my mobile device to check my balance…
According to a recent Harris Interactive survey, 53% of US consumers have no interest in using their mobile device for banking; but 16% of consumers already use their mobile device for some form of banking. Compare that to a TowerGroup report from late 2007 that predicted more than 40 million US consumers using mobile banking services by 2012 (growing from 1 million in 2007).
So while these launches are a big step forward in mobile banking, they are still not compelling enough for most consumers. Things start getting interesting when banks start offering more advanced services like person-to-person (P2P) money transfer, mobile wallet, etc. A few transactions are especially worth tracking in this context :
- Bank of America’s investment in mFoundry (a mobile banking technology provider)
- Citigroup’s newly formed JV (called Mobile Money Ventures) with Korean carrier SK Telecom
- Qualcomm’s acquisition of Firethorn (another mobile banking technology provider)
- Investments in Obopay (a mobile payments company) by both Qualcomm and Indian wireless carrier Essar Communications (now majority owned by Vodafone)
- Nokia’s formation of a JV with Giesecke & Devrient (2nd largest smart card manufacturer)
In upcoming posts, I will look at how and why non-traditional financial services players like device OEMs and wireless carriers are trying to get into this space, which parts of the world we are seeing some early indicators of customer adoption, and what that tells us about the (potentially different) value propositions of mobile banking services for different consumers.
