Competition for Mobile Banking Keywords

This morning I was surfing the web to see if there were any big announcements as we prepare to wrap-up 2007. On this day my ordinary channels were fairly quiet so I decided to perform a generic Google search for anything "mobile banking" related...and this was my result.


It's likely that I've seen a similar result before, but this is the first time that it truly registered - the competition between banks and carriers is in full swing. If you notice the top two CPC ads are for Wachovia and AT&T. For the average consumer this appears to be two distinct offers; yet, we know that both are in the end the Firethorn solution.

A little more digging revealed that the term "mobile banking" is still a bargain compared to terms such as "checking account" and "home equity." This is primarily due to the revenue disparity of the products; however, it's disconcerting to think that we now have to compete with the financial resources of the largest carriers in the world in addition to the largest banks.

Mobile Banking Short Codes

Last week there were a number of newsworthy mobile banking events. I've included links to the majority of them below, but I wanted to take a moment to focus on one in particular.

Bruce Meyerson published an article in Business Week titled Why Wireless isn't Wide Open.

In short Mr. Meyerson says, "Even as the wireless industry chants a new gospel about opening mobile-phone networks to outside devices and applications, some of the biggest U.S. carriers are quietly blocking new services that would compete with their own."

The reason why I'm highlighting this article is because it's troubling on multiple levels:

1) It's concerning to think that a solution where the carriers already have a financial motivator (i.e. earning revenue per SMS) that short codes would be delayed.

2) That a large number of clients could be excluded from utilizing a mobile banking solution simply because the short code had not yet been approved.

3) Even a vendor with an existing relationship can not sail through the approval process.

If you're thinking about offering SMS banking without the assistance of a vendor I'd reconsider, and if you think you're going to design a solution that will circumvent the carriers - I'd think again.

Other Newsworthy Events:
Bank of America has a new iPhone GUI
Fundamo enters US
Clairmail Wins Red Herring 100
NACHA Announces Mobile Banking Initiative
Fidelity Adopts mFoundry Solution
Guardian Analytic Introduces FraudMAP

Mobile Banking - Payments with Drew Sievers

Last week I had the privilege of speaking with Drew Sievers (CEO - mFoundry). We have spoken previously, yet each time I leave further impressed by his knowledge and understanding of mobile banking industry.

On this occasion we discussed a number of recent events, but the topic that most captured my attention was "mobile payments." During the call, I mentioned reading that "virtual wallets" are 18+ months from becoming practical and asked Drew to share his thoughts on the topic of wallets...payments...and the future.

Drew began by explaining that the term "mobile payments" is a really an over-arching initiative that is comprised of four different phases, and that the virtual wallet component is actually the fourth and final phase. When I asked him to clarify, here is how he described the landscape unfolding:

Phase 1) Bill Payments through the Phone. Similar to online bill pay except using the mFoundry solution to authorize payments through the mobile device.

Phase 2) Peer to Peer Payments. mFoundry will facilitate the movement of funds between mobile devices.

Phase 3) Non-Contactless POS Transactions. This scenario would involve a client receiving a 4 digit code on their mobile device which they would then hand-key into a POS terminal.

Phase 4) Contactless and NFC. Having a chip embedded into the device which is waived over a reader to authorize the payment.

Through this approach Drew was able to illustrate for me that while virtual wallets may be some time off mobile payments (i.e. phase 1) is here today.

Now, I've been heavily involved in the industry for some time and have participated in discussions about all of these topics; yet, this is the first time that I've seen the pieces of the puzzle come together. This 4-phase description helped crystallize for me how the future of "mobile payments" is likely to unfold. So, I decided to share it with you...

PayCash - Mobile Banking Vendor

Earlier today it was announced that, "Cyphermint's Chairman of the Board, Dr. Ivan Kuznetsov, has been named as Project Leader for Mobile Payments of the Information Communication Union (ICU) of Russia."

In addition, Dr. Kuznetsov was also appointed Project Leader for the Mobile Payments Project (NFC and M-payments) at the GSM Association meeting in London on November 23, 2007.

Until today I was not familiar with Cyphermint (Headquartered in Marlborough, MA) or their PayCash product, but it sounds like their chairman is well respected in the industry.

"PayCash enables consumers to conduct bill payment, mobile banking, person-to-person transfers and retail payments around the world. PayCash is currently available in 16 countries with expansion into 6 additional countries under development. PayCash Mobile is designed to enable cash loading, credit, debit, stored value cards and bank accounts for funding of mobile payments such as mobile banking, bill payment, mCommerce and other payment related services using their existing mobile device since the technology is Java, SMS and WAP compatible."

Mobile Banking and Mobile Operators

Recently, discussion pertaining to the role of mobile operators within the mobile banking and mobile payments space has brought to light a number of critical issues that could ultimately affect the success and growth of the entire channel.

I am referring to questions such as:
1) Who "owns" the client
2) How will the operators be compensated? By whom and how much?
3) What regulatory issues will the operators face?
4) When fraud occurs who bares the financial burden?

In fact, the question of who owns the client was posed to the panelists of the Aite round-table in November. My response was basically this, "there will be a handful of operators that try to own the clients and the others will let the banks own the relationship. In the end the consumers will vote with their dollars, and I believe that it'll be readily apparent that consumers prefer to have banks safeguard their money."

Here are a few resources to read more on this topic.

1) Mobile Payments: Top 10 Issues between Banks and Mobile Operators written by Paul Ruppert on the blog Mobile Point View.

2) Mobile Banking, Payments and Commerce: What Mobile Operators Really Think published by Aite Group.

3) The Evolution from Mobile Banking to Mobile Payments by Glenbrook Partners

4) Mobile Payments - A Discussion by blogtwopointzero. This post is a little lengthy, but has a number of interesting points including this quote from Simon Cavill (CTO Mi-pay), "In the West, we have two very grown up industries, with their own rules and regulations, their own controllers and their own tight government intervention on a number of levels," he continues. "In Europe the EU has drawn a line in the sand and said to the mobile operators that they will not be banks. If a bank goes down, the government guarantees your money. If the mobile operator goes down, there are no guarantees."

ATT Now Wide Open

It used to be that I only read the USA Today at a hotel while on a business trip. However, last month I was flipping through the paper and saw an ad promoting the mobile version of their site. Needless to say, I now check out the site 3-5 days/week and have become a fan.

This morning as I was scrolling I was very pleased to discover a story written by Leslie Cauley titled "AT&T flings cellphone network wide open." The ironic part is that exactly 7 days ago (nearly to the minute) I posted an article where in I applauded Verizon for being "open" and was critical of AT&T. So...I'd like to take this opportunity to now applaud AT&T for opening their network.

To be honest I'm glad they made the move. I'm nearing the end of my AT&T contract and want to stay with them because of the iPhone. A little hypocritical -yes- because the iPhone is closed, but cut me some slack it's the iPhone.

To tie my November 19th article about Google, Ralph de la Vega, CEO of AT&T's wireless business stated, "Everything that Google has promised to bring to the wireless market a year from now AT&T is doing today, de la Vega says. 'We are the most open wireless company in the industry.'"

New Mobile Banking Providers

Earlier today I received information on two new mobile banking vendors.
The first is, "Pyxis Mobile, the leading provider of innovative wireless applications for the financial services industry, announced the availability of their product for Retail Banking, part of the Banking Mobility Platform (BMP), a secure infrastructure to support mobile access to traditional banking functions...This rich-client approach has been widely accepted and proven within Pyxis Mobile’s extensive customer-base of financial institutions that includes over 50% of the leading global asset managers." Full Story...


The second, Access Softek Inc., is utilizing a series of webinars to promote their Mobile Finance Manager software. The company's website states, "Access Softek, Inc. is a global software development company that for the past twenty years has earned a solid reputation for satisfying the most demanding technical needs of software companies in America, Europe, and Asia. Our clients include Microsoft, Apple, Adobe Systems, Symbol Technologies, H&R Block, Motorola and NEC."

Also note that Richard Crone of Crone Consulting will be helping to facilitate a number of the webinars.