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CTIA Highlights Mobile Payments and Banking Services
The biggest announcement by far at CTIA for the billing and payment space had to be AT&T’s announcement of its mobile banking initiatives with Wachovia, SunTrust and Regions Financial Corp. The banks will use Firethorn’s mobile banking and payments solution to enable customers to check balances and pay bills using their mobile device. In many situations they will leverage CheckFree technology fore online bill presentment.
What was especially enticing for these service providers was that Firethorn’s secure application can be downloaded easily without requiring changes to the handset. Downloading though is only a short term solution until customers receive handsets with the banking functions built in.
“We have 61 million customers, and we release tens of millions of handsets each year. By the time momentum picks up, we will be ready,” said Spencer White, director of mobile financial service and business development of consumer data services for Cingular Wireless at the Mobile Payments Conference, held in conjunction with CTIA.
Consumers could download the application right now, but White was quick to point out that to promote real adoption, the application has to be displayed prominently on the handset. “If consumers can’t find it, they won’t use it,” White said, so AT&T/Cingular will embed the functionality in the handset. The banking icon will appear prominently in the tool bar.
As for marketing, AT&T plans to launch a multimillion-dollar campaign at some point this year.
Security issues are on the minds of consumers and attendees, whether relating to mobile banking or mobile wallet services. “When you link a phone to a bank account, we take that very seriously,” said White. . “There is no need for us to launch these services too quickly [beyond mobile banking]. We want to make sure that we don’t have any high-profile events,” he said.
The desire to keep a low profile is understandable, given all of the media attention given to pretexting in recent months. If carriers can’t be trusted to protect simple call records adequately, why would anyone be willing to trust them with crucial bank account information?
Credit Card Companies Want In
Beyond the basic functions of mobile banking, everyone has an eye on mobile wallets, and discussions about banking quickly turn to m-payments.
White points out that the existing credit card market is saturated, and given the growth in debit card transactions and the disruptive nature of the associated lower transmission costs, “card issuers are looking for growth, and they are looking at the mobile industry.”
However, this is a contentious issue because Visa, MasterCard and the wireless providers will inevitably battle it out behind the scenes over revenue share. At the event, though, both companies went to great efforts to downplay this tension.
“There are a lot of challenges today. As we extend dialog, these are things that will be worked out over time,” said White. “Much of the industry likes to talk about how the financial industry and the wireless industry can’t get along; I think in the long term that is not going to be the case,” he said.
“Given the striking similarities in the paths our two industries have traveled, it is only natural we have arrived at a moment of convergence,” said John Philip Coghlan, CEO for Visa, in a keynote speech. He believes the convergence of payments and mobile is inevitable. However, Visa and MasterCard were reticent about anything specific.
“These are two giant industries looking at their own services and competing within their own spaces. It takes a while to launch these services, and it is something that is going to have to be managed carefully,” said White.
And besides, ironing out tensions between two industries won’t be the only hurdle. “There are over 20,000 financial institutions in the U.S., and four to five top U.S. carriers,” White said. “Somehow standards are going to have to be addressed about how to provision account information and other information onto the phone. There are a lot of provisioning issues.”
Given the ratio of wireless providers to financial institutions, he added, “if carriers don’t exert leadership in this space, we are risking a bottleneck.”
Although White focused primarily on AT&T’s banking announcement at the event, he did address issues of hard goods and advertising.
“We want to put as much control as possible of what a subscriber would want, in terms of advertising,” he said. “And we fully support the opt-in model. But if a subscriber is not a part of that scenario, then we are not interested in pushing advertisements.”
“People always use the example of Starbucks pushing a coupon out to the user as they walk by the coffee shop—we consider that spam. We do not think that is the way the industry is going,” he said.
White considers mobile purchases of hard goods a nascent market. “We are in no hurry,” he said. “We don’t think the cell bill is the appropriate place for that. Our customers are price conscious, and the sticker shock doesn’t make a lot of sense.”
Moreover, he said, “the types of fees that would be associated with that would not be acceptable to the merchants. We don’t want to load up the phone bill with charges. There are a lot of opportunities out there, and we have to prioritize. For now, banking capabilities are a good place to start.”
Encouraging Results in BancorpSouth/AT&T Trial
Although the big announcements this week involved SunTrust and Wachovia, interesting survey information was also released from a trial that involved BancorpSouth, AT&T, Firethorn and CheckFree.
BancorpSouth was an early adopter of Internet banking, as far back as 1995. At that time it had 1,250 online banking users. Today 50 percent of its customers use Internet banking. According to Michael Lindsey, senior vice president, “Without online usage, we would have to invest 35 percent in yearly capital expenses if those customers didn’t have the online self-service capabilities.” Pioneering again, the bank set out to trial online mobile banking services.
It was able to leverage its existing relationship with CheckFree for online bill presentment, so trial participants didn’t have to re-enter the information that was already a part of their web-based account. Firethorn provided the payment application.
“We put a banner up on our website, and within days had 250 people sign up for the trial,” said Lindsey. In all, the bank signed 500 participants. Before the trial began, participants stated their expectations: they believed they would be more up to date with finances, save time, be able to use the service anywhere, and it would be easy. By the end of the trial, 75 percent stated that all of these expectations were met. In addition, 50 percent felt they had increased control over their finances.
If the participants were to have access to these services in the future, they said they expected to call the call center 50 percent less often, go to the local bank branch 42 percent less, and visit an ATM 30 percent less frequently.
As for the participant’s impression of AT&T/Cingular as the wireless provider enabling this service, 50 percent thought more highly of the mobile carrier.
In next week’s newsletter we’ll go more in depth into the business challenges, standards issues and other trends for the mobile banking and payment space.
Comments and feedback welcome, please email Jill Morgan at jmorgan@billingworld.com.
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