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Tuesday, September 8, 2009

Mobile Banking Discussion with Cameron Franks of Sybase

Today I'm excited to publish the notes from my interview with Cameron Franks - Director, mCommerce - Sybase 365. Click to learn more about Cameron.

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

A: Sybase is an aggregator; plus, we provide software for banking and payments. Sybase is the only vendor that provides both.

Q: Who are your key clients?

A: Compass Bank (iPhone app and SMS alerts), Citizens Bank (Business Mobile Banking), Citi Bank (Messaging and Intelligent Services), IXE (WAP, SMS and Application). In addition, we have PayPal, Mastercard and Western Union utilizing our messaging services.

Q: Who are you key partners?

A: Within the Sybase family we work closely with Financial Fusion. Externally, we partner with IBM and Western Union.

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: Sybase offers two approaches:
1) Purchase the License Up Front. Depending upon the size of the institution and options selected this will cost approximately $300-$500k.

2) Pay Monthly. The cost of this model is based upon the options selected and the number of active monthly users. For example: An FI with a small number of users could expect to pay roughly $50,000 per year.

Additionally, we’re developing a third model for small banks. This will be a streamlined version that is hosted by Sybase and will be less expensive – more details coming soon.

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

A: A reduction in calls to the call center has materialized. Clients are choosing to use mobile banking instead of calling.

Also, more banks are using their mobile banking service as an acquisition tool and a retention tool. Banks are using the image of the iPhone in their advertising to draw the attention of prospects.

Q: What’s your highest client adoption %

A: It’s reasonable to expect 5% adoption of online banking users within 6 months.

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

A: The clients using WAP and applications are almost exclusively high-end smart phone users within the Gen X and Boomer demographics. However, we are starting to see lower-end smart phones being used by the Gen Y segment. SMS is very interesting because we’re seeing usage from Gen Y, Gen X, Boomers, and even some Seniors.

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

A: The majority of users are focused on checking their balance. Some clients are reviewing their pending transactions and transferring funds, but we’re not seeing a lot of bill payment activity. Account alerts will be the catalyst that will drive adoption of bill payment and advanced functions.

Q: What security elements are incorporated into your application?

A: The key is to make sure that layers of security are appropriate for the service. The Sybase platform is channel aware and can allow the institution to dictate what’s required to complete the transaction.

For example: Requesting a balance can be performed via SMS and there’s really no need for additional security. Yet, for transferring funds via SMS the institution may wish to require an additional layer of security.

Q: How likely are biometrics to become a component?

A: Biometric security is a long way off because the devices don’t have the necessary hardware.

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

A: A couple of years ago people were trying to figure out how to get their application on every phone and which carriers to work with. The iPhone and App store took care of this question; plus, removed many of the banks’ customer service concerns.

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

A: Marketing of the mobile banking service is very important. In the UK nearly half of financial institutions now have their SMS short code on billboards and general advertising.

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

A: The two main developments we anticipate are:
1) More effective P2P solutions. In many other countries it’s easy to move money online between banks. This is an untapped market in the US and is a great opportunity.

2) Mobile Coupons. We need to resolve questions around opt-in, privacy, and enrollment but there’s great potential.

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

A: Banks need to focus on creating services that make sense while you’re mobile. Alerts for example add incremental value. These types of services will drive uptake.

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