Giving it another shot...

Mobile Banking's Second Act
Keith Sniatecki

Seventy percent of Americans own cell phones. That’s over 200 million people. It would seem crazy for any kind of company to ignore a customer base that size. But what is involved in attracting those customers to your service? That is the conundrum faced by bank executives today when considering mobile banking.
In the beginning of the decade, several big financial institutions rolled out mobile banking initiatives, but it seemed neither consumers nor technology was ready. Some people insist that, now in 2007, we are ready to turn the corner. There are several key reasons backing this assertion.
The first is that the actual phones we have today are better. It says handsets today have “microprocessors that rival the power of a late-90s computer.” Second, we are more familiar with the use of cell phones for more than just phone calls. Many people have already purchased online games, ring tones, etc. on their mobiles. The same challenge, however, remains.
The biggest obstacle facing mobile banking is the logistical problems between banks and mobile carriers. Additionally, there is the issue of compatibility with the thousands of models of handsets out there. Unlike the Internet where a bank could host its own site, the banks would be relying on the closed-data networks run by providers such as Verizon or AT&T. While it is attractive for these companies to see people relying on phones more, they would not be willing to let banks use their networks for free. Additional expenditure on the bank side further questions the viability of this already questionable venture. There are some alternative solutions for this.
One option is to have users access a mobile website. A bank would build a separate wireless (WAP) interface that customers navigate to by typing in a Web address. This, however, can be a slow process with even simplified pages. Also, it can get expensive for mobile users constantly paying for internet access. Additionally, security is another major concern.
There are also downloadable or pre-loaded OEM client applications. To use one of these, you would click to launch the application and it would prompt you for an access code. Then you would be able to access your bank information and complete simple tasks like check account balance, pay bills, or transfer money from checking to savings accounts. A concern with this is that since you are downloading information to the phone, it would be a security issue if you lost the phone.
Some major players in the development of this industry would be third-party core system and payment providers. They could act as the middleman between carriers and banks. This is the key to making mobile banking a reality. It is difficult though because banks and carriers are both huge industries that are unaccustomed to compromising their own core capabilities and sacrificing profits.
Despite the complications, mobile banking remains on the table as an in-progress innovation. Earlier this year, many big banks attempted to provide mobile banking services once again. Its attraction is the enormous scope of cell phones these days. Most young people view their cell phones as their most important possession. Banks do not want to lose they young customers and they will continue to pursue ways to attract them. Additionally, using a technology called Nearfield Communication (NFC) would allow debit transactions to made with cell phones instead of traditional plastic cards. This is already prevalent in Japan. No one wants to be left behind in what could potentially be the next wave of e-commerce, but they don’t want to go grow broke trying to catch it either.