All the big metaphors are in play. We have heard that mobile banking will wash over banks like a flood, change the course of banking behavior, and forever change banks and banking as we know them. It could even surrender banking to the telephone companies.

Anyone who has watched the rise of ATMs, HELOCs, debit cards, Internet banking, and Remote Deposit Capture should know better. Seismic change rarely starts out seismic.

So what does mobile banking look like these days? In the United States, it’s a fairly humdrum list of home banking features – balance checking, bill payment, and funds transfer plus a ‘find your nearest ATM’ feature for traveling mobile users.

Should banks be surprised that lines of excited customers have yet to camp out in front of branches overnight to sign up for mobile banking?

The fact is, banks are searching – first for applications that will drive traffic to mobile banking; and second, for a way to cover the cost of this new channel and make it an advantage rather than another expensive banking commodity.

What applications might fire up the base of mobile bankers? The following might get your customers talking about mobile banking at social events (as they do now with iPhones):

• Electronic Wallet – mobile phones could provide access to real time transaction data, including pending transactions so consumers can know their financial condition wherever they are and whenever they want.
• Purchases – mobile phones could pay vendors on the spot, eliminating the need for cash or credit/debit cards.
• Special Offers – mobile phones could link consumers more tightly to buying opportunities within walking or short driving distance of their current locations. Vendors simply target all mobile phones linked to a prescribed consumer profile who happen to be within reach of their retail locations.
• Auctions – mobile phones could extend the reach of eBay and other auction vehicles so that bidders no longer need to remain tethered to their computers to win.
• Sound a little more like mobile banking? Then hold the tidal wave a little longer because there’s a lot of behind-the-scenes work to be done:

Cell Phone Security

We have yet to see a serious attack on mobile systems, but add a financial component to the messages being transmitted via cell phones and I guarantee the criminal element will become much more interested. Banks also need to understand how consumers perceive cell phone security and whether they will trust the channel enough to adopt it. Other questions, such as how a financial institution should respond when a customer’s cell phone is lost or stolen, will become very important when this channel takes off.

Typing Anyone?

Today’s cell phones aren’t known for their spacious keyboards or wide displays. Hence the developers’ race to provide consumers with the information they need to bank from their mobile devices – such as viewing multiple accounts. New phones will help with improved displays and keyboarding, but they will also add more devices that need to be compatible with the mobile banking application.

Carriers

Who do your customers choose – AT&T or Verizon or Sprint or TMobile? Which message format will they use – SMS (short message protocol)? WAP (wireless application protocol)? A combination of WAP and AP? What happens if a call gets dropped in mid-transaction? What happens when a carrier wants to charge fees for map services and other add-ons? The carriers should want to cooperate with financial institutions, since mobile banking and bill payment will expand their grip on the customer through more extensive network plans and equipment complexity. We’ll wait and see.

Helping Customers

Something will inevitably go bump in the night in the complex world of cell phone models, carrier policies, merchant networks and payment technologies. Who will your customers call at 1:30 a.m. to help them through an issue? Further complicating the customer service scenario is the ‘newness’ factor of mobile banking. When everything is brand new, everything is under-tested. Keeping staff and responding appropriately to potentially frustrated customers will challenge every bank that offers mobile banking, particularly in the early days.

Marketing

The biggest challenge of any new banking channel is figuring out how it can drive profitable volume. Will your bank be able to collect merchant fees for processing mobile banking transactions on their behalf? Could special offers produce additional revenue for the bank – either from merchant or customer? Might your customers pay for expert management of their electronic wallets? Perhaps your customers’ transaction data can help identify new cross sell opportunities when analyzed by your bank’s CRM.

Banks have time now to consider all of these opportunities – before mobile banking becomes the rage. A few players in the industry have successfully stimulated consumer interest in mobile banking. Now it’s time to roll up our sleeves and make this channel worthwhile for everyone involved.