US Operators Partner Up for M-Banking
M-banking services, similar to the online experience, have already taken off in developing markets, but Heavy Reading research analyst and report author Denise Culver believes North America will be a fast follower. (See Airtel Intros Mobile Wallet in India and Mobile Banking Reaches Rural India .)
"While the situation in the U.S. may not be as cohesive between network operators, service providers, and processors as outside of the U.S., there is more of a convergence toward an ecosystem model," notes the Heavy Reading Mobile Networks Insider report, "Smartphones Power a Mobile Banking Surge in the US."
That ecosystem is already being built up in the U.S. as financial institutions, hoping to attract new customers and compete, look toward wireless operators. Culver said that in order to exploit the unique qualities of mobile, including location, portability, interactivity and timeliness, financial institutions and vendors must work with mobile network operators (MNOs) to develop industry standards to ensure security and the quality of m-banking applications for consumers and enterprise customers.
"Wireless vendors and operators initially will create and release m-banking applications on their own," Culver said in an e-mail to Light Reading Mobile. "However, there will be a tremendous amount of merger and acquisition movement in the space, as the bigger players pick off the applications and services that best round-out their offerings. Further, MNOs and vendors will partner with the financial players to build loyalty to their brands."
Heavy Reading forecasts that 59 percent of U.S.-based financial institutions will ramp up mobile banking services by 2012, so operators have no shortage of partners from which to choose.
Lines are already being drawn in the U.S., however, with partnerships like Isis (among AT&T Inc. (NYSE: T), Verizon Wireless and T-Mobile US Inc. ), Barclays, and Discover. Isis is focused on a different part of mobile finance -- near-field communications (NFC)-enabled m-payments -- but the contactless technology could have an impact on m-banking as well. (See US Carriers Combine Mobile Wallets.)
The fact that consumers are already comfortable with banking on the Web (50 percent of Americans do it in some form) and with using apps on their phones that require financial transactions bodes well for an eventual rise in comfort levels with both m-banking and m-payments.
The industry still needs more education on the value of the services and the security parameters they'll have in place, Culver said, but that should come this year as the services are a strategic priority for most financial institutions and their partners.
Convincing consumers of the value in m-Banking will also be easier since the space is attracting interest from companies like Apple Inc. (Nasdaq: AAPL), PayPal and Google (Nasdaq: GOOG). Right now, it's still a land grab, but as these players make their moves, it may get harder for MNO services to stand out. For them, time is money. (See Google Does the Executive Shuffle.)
"To capture customers in these markets and address customer needs with services, MNOs require a low cost, rapid entry solution with a high security level," Culver said.
— Sarah Reedy, Senior Reporter, Light Reading Mobile