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Tuesday, August 4, 2009

Mobile Banking: Scott Moeller of MShift

In July I had the opportunity to interview Scott Moeller (CEO of MShift), and these are my notes from the conversation. To learn more about Scott please click here to visit the MShift.com website.

Q: What’s your differentiator? What sets your mobile banking solution apart from the competition?

A: Our differentiator is experience and history. We have been building mobile banking solutions since 1999 and two of our U.S. clients, Patelco and Golden 1, have been live since 2000-2001.

A bit of history – in 2000 Mshift received a Series B investment from MTI, the largest supplier of mobile phone content in Japan. And since the U.S. market wasn’t ready, the majority of our revenue from 2001 to 2007 came from 100+ deployments in Japan. This experience helped us to become “lean and mean” because in Japan quality control is huge, and you don’t launch a product as a beta.

Because of this experience, the MShift technology was able to leap generations ahead; for instance, the ability to take information and reconfigure “on the fly” for the device was patented by MShift in 2005. It’s the difference between building a car with the assistance of an assembly line vs. trying to build each by hand. Today we’re able to deploy in days/weeks instead of months/quarters, as our competition.

Q: Who are your key clients?

A: Some of our largest clients are Capital One, M&I, Patelco CU, Golden 1 CU, and North Carolina State Employees CU. Plus, we have over 200 mobile banking deployments in the U.S. today including:
• One Top 5 bank
• Two of the Top 10 banks
• Eight of the Top 25 credit unions

Q: Who are you key partners?

A: We have multiple resellers but I can’t promote the partners because of confidentiality agreements.

Q: Budget season is just around the corner, and the #1 question bankers want to ask is – What’s it going to cost me?

A: The only time a mobile banking solution is expensive is when you’re working with a custom design. The MShift installation fee is very minimal because we want to eliminate the barriers to entry. We decided that launching a mobile solution shouldn’t require approval from a budget committee. As of 2009 MShift has also incorporated all 3 channels (Browser, SMS, and Application) into our offering.

For the monthly fee, we believe in “success based” pricing and financial institutions only pay for active users of the solution. You don’t pay when it’s not used and institutions can realize additional benefits for increased usage.

Also, be sure to ask - how will it make me money?

Q: What components of your ROI model have begun to materialize?

A: Credit Unions and Regional Banks like mobile banking because they have fewer ATMs and this is a way for clients to check their balance. We’re currently working to collect tangible data for white papers.

Also, we’ll be revealing new technology in September that will allow FIs the ability to track/data mine all elements of the mobile offering and then produce graphical reports that will be delivered on a monthly basis. This will be HUGE in assisting product managers in presenting a compelling case for the viability of the channel. To learn more be sure to attend Finovate in New York this September.

Q: How many active users do you have across all FI’s?

A: We have roughly 2 million users across our FIs today. We’re in a mass adoption cycle right now and the catalyst was the iPhone. In fact, we have some clients that are seeing adoption increases of 20-25% per month.

Q: What’s your highest client adoption %

A: One of our best performing institutions is BankPlus in Mississippi with adoption near 20%. View the BankPlus 2Go Commercial.

Q: What’s your lowest client adoption %

A: We have a client in San Francisco with adoption near 1.5-2.0% but mobile banking is not a focus and they don’t promote the product.

Q: What do the demographics of your users look like?

A: For the Gen Y segment you must have mobile banking. This segment is now graduating college, entering the workface and beginning to make money. This is an important segment. We also see data to show that Gen X clients are open to the technology and using it in conjunction with current channels. Finally, the Boomers, we’ve been surprised by how are using the product, and they are also some of the most compelling advocates for mobile banking applications.

Q: What do the usage patterns look like? Balance, History, Transfers, BP, Locator?

A: Balance is number one followed by requests for transaction history and bill payments. We see some clients using the product 8-12 times per month but the average is near 3-4 times per month. For speed SMS is very valuable, but we believe this is likely to fade in coming years.

Q: What security elements are incorporated into your application?

A: Mobile banking is as secure, if not more secure, than the traditional online banking applications. There’s also specific security that Mshift has built into the solution for the mobile users; plus, another level of security built into the Mshift architecture, but we can’t disclose the details.

There are concerns with the idea that clients are carrying around small computers. Viruses, worms and malware will become more compelling to hackers as platforms grow in size, but the key is making sure to enable access without creating a bunch of road blocks. Too many road blocks will hurt adoption

Q: How likely are biometrics to become a component?

A: Biometrics might be incorporated into hardware for healthcare or defense applications but it won’t be as important for mobile banking. Today ATM transactions only require a 4 digit PIN.

Q: How has the iPhone changed your approach to the business?

A: The iPhone is a “game changer.” This is the first time that the average consumer could access the web from their mobile device. Now the mobile device is used as a phone but more often used for text, web, calendar and more. Remember, we’re the last generation to understand the world BEFORE the internet. My 3 ½ year old son is teaching himself how to spell with a $0.99 app. When the app store hit – the opportunity was realized. It allowed MShift to focus on the U.S. market.

Q: What has been your biggest surprise/lesson-learned over the last couple of years?

A: My biggest surprise is that we no longer need to educate banks on the importance of mobile banking – banks GET IT! We were initially afraid that banks might skip mobile during the recession but they haven’t. Sales have become incredibly easy. Mobile banking is now a necessity.

Q: What big industry development should we expect within the next 12 months?

A: Today when we leave home we need our phone, wallet and keys but that will change. The mobile wallet will become more prominent, but it will take five years to evolve. This could also impact Visa and Mastercard. The carriers and/or FIs could give them a run for their money.

Q: What can banks do a better job of to facilitate adoption?

A: To become more successful banks need to work in conjunction with their vendor and do a better job of leveraging their data. Also, you do need all 3 mobile banking channels so that the customers can decide which solution they want to use. The mobile browser (i.e. MShift) will be relevant for years – it’s umbrella coverage. Downloadable solutions are in high demand today, and SMS is really important today but will be greatly diminished in 3 years.


Anonymous said...

Great interview.

I would love to hear some comments from current or past clients that use Mshift as a vendor.

Why did you choose them or another vendor?

What have your experiences been?

I have seen them just scrape websites and internet banking companies.

How has this worked for clients? What happens when the scrape breaks?

David Gerbino said...


this is great information. This will truly help all us bankers. I wish I could have all your interviews now.

The timing of this series is great as I am currently writing a research brief on mobile banking for my bank for our next fiscal year. The data you provided me via twitter a few weeks ago was good and this series will be even better.