Apple today introduced its latest invention, a gigantic $499 iPod Touch called the iPad (inset shows iPad, Kindle, vs. iPhone; note 1).

It's a gorgeous piece of technology that will soon be the movie-watching, ebook-reading device of choice for the rich and famous. But what does it mean for the average financial institution?

Tactically, it should have almost zero impact. Your iPhone/iTouch app should work pretty much the same on the iPad. There may be some design tweaks your programmers will need to understand, but the basic functionality is the same.

It would make a wonderful giveaway item, either as part of a high-end business/private banking package (note 2), or as a sweepstakes prize.     

So those of you who already have an iPhone app launched, or in the pipeline, can stop reading now. But read on if you haven't yet hopped on the app bandwagon.

___________________________________________________________________________

The movement to apps, and away from old-school "browsing," is unstoppable. The iPad joins a growing list of new devices (Android, Kindle, etc.) that are app-primary, browser-secondary (note 3).

It's a massive shift that's happened in less than two years, beginning in July 2008 when Apple opened the iPhone platform.

The popularity of apps is changing how users tap online info. Even power laptop/desktop users are making dramatic changes in their information consumption. For example, within a few months of the Apple app store launch, I had already moved 12 of my routine info-gathering tasks to the iPhone. The speed/convenience of pressing a single button vs. navigating to a website via the browser is a significant improvement in user experience. More than a year later, my habits have changed little. 

The change from serving customers who were "online browsers" and are now "mobile app users" has profound implications for banking. Instead of talking to your customers in batch- mode with built-in time delays, you are now real-time, feeding data to customer on the go, where they need up-to-the-minute status on their cash situation.   

In many ways, the ROI for real-time banking (and here) is more dramatic than online-batch banking. The ability to stamp out POS fraud, to nip budding customer service nightmares, and just plain get closer to the customer, all bring nice returns on the mobile investment (note 3).

Notes:
1. Photo credit: TechCrunch post today.
2. For more info on using a dedicated device for small business customers, see our October Online Banking Report.
3. Groundswell author and Forrester analyst Josh Bernoff calls this the "splinternet."
4. For more info on financial services opportunities on the iPhone, see our March Online Banking Report.
5. Initial response online was mixed, 2,700 readers of CrunchGear, voted "thumbs sideways" today (link, results at 4PM Pacific below)

John Cook, a Seattle tech blogger at TechFlash, was apparently the first customer to use the new Starbucks Mobile Card iPhone app to purchase coffee at the Seattle Columbia Center Starbucks. The video was posted at 3 PM yesterday. For more info on the app, see yesterday's post.

He had a little trouble getting the point-of-sale scanner to read his iPhone-app-generated barcode, but after an extra few seconds (25 seconds actually) of wiggling the phone, the transaction worked (the transaction begins at about the 1:19 mark). Hopefully, with a little practice, users will know where to place their phones in front of the scanner for easy reading. He also demonstrates a card reload after the purchase (at 3:05 mark).

Notes:
1. The myStarbucks app has moved up to number 6 in the iTunes app store, while the mobile card is at number 29 (as of 4:30 PM Pacific).
2. The mobile payments capability is live at all 16 test locations as of yesterday.

This is a huge day, and one that I hadn't expected for at least another couple years. The convergence of mobile payments and caffeine. What more could a mobile banking geek and coffee connoisseur want? 

Starbucks pioneered stored-value cards and launched its first card in 2001. Today, it became the first company (note 1) to create an iPhone app exclusively for a payments card. Apparently, Finovate alum mFoundry helped build the app (cnet story, thanks Brandon).

Users were offered $5 extra credit on their first Starbucks card reload of $25 or more made from the new app. Registered cardholders received an email notification earlier today urging them to "turn your iPhone into a Starbucks card." (see screenshot below).

Note, the Starbucks Card Mobile app (app store link) is in addition to the regular myStarbucks app which has a store locator, coffee/drink info and a favorites-sharing function (app store link). That app also launched today (notes 2, 3). 

The app is gorgeous and shows how important design can be in creating a trustworthy and easy-to-use payment product (note 4). For example:

Home screen (left screenshot):

• The card balance is immediately and prominently displayed

Reload screen (middle screenshot)

• Uses big, easy-to-read buttons--remember, this is a small screen, with a giant green, full-width Continue button  
• Current balance repeats at the top

Mobile payment screen (right screenshot)

• The bar code for mobile point-of-sale payments (test only, see below) is rendered over a background image of the card, complete with card number, a nice touch to reassure users and Starbucks baristas that this is the real thing.

Analysis
Of course, the mobile commerce and banking community will be abuzz about the mobile payments test. At 16 Starbucks locations (8 in Seattle and 8 in Silicon Valley), iPhone users will be able to pay at the counter using a barcode generated on screen (right screenshot). Luckily, several Starbucks are within a couple miles of my home so I'll be able to report back with results as soon as the test locations are live.

But I think the stored value card management functions are more interesting for the present. Just think if you had an application that looked like this for your debit or credit card. Think of the brand-value uptick, PR notice, and word-of-mouth buzz. 

Starbucks Card Mobile screenshots (23 Sep 2009)

Email announcing the new mobile card app (sent to a registered Starbucks cardholder in the mobile payments test market, 23 Sep 2009, 12:43 PM Pacific)

Notes:
1. Starbucks is the first company in the U.S. to have a dedicated app for a payments card. Although unaware of any elsewhere in the world, I would expect that card apps exist, at least in Asian markets.
2. The main Starbucks app is currently the 33rd most popular free app in the store and number 1 in Lifestyle; Starbucks Card Mobile is number 46 overall and 3 in Lifestyle (6 PM Pacific).
Update (9 PM Pacific): myStarbucks has moved to number 19 and Starbucks Card Mobile to 38.
3. The Starbucks apps are huge, 6.3 MB for the regular and 3.7 MB for the card, so makes sure you have good reception or are connected via WiFi.
4. However, I have been unable to log in to my actual Starbucks account as of 7 PM Pacific, owing perhaps to overloaded servers.
5. For more info on financial institution opportunities, see our Online Banking Report: Mobile Banking via iPhone.

Have I mentioned that the iPhone is amazing? I'm not sure if it's because it's so useful having a computer in my pocket 24/7, or that it gives me so much material for Netbanker and Online Banking Report (probably the latter).

Now that we are beginning the second year of the App Store, we are starting to see some more interesting things on the finance front. For the first year it was all about tip calculators, balance inquiry, ATM locators, and manual-entry expense trackers.

This summer, we're beginning to see the bigger potential with the launch of remote check depositing from WV United Credit Union and USAA (which also loaded helpful auto insurance features into its app). And Apple's new OS 3.0, which supports push notifications, will be a boon to mobile banking apps.

But that's just the beginning. There will be an app for anything you might want to do with your finances. The latest: a free Home Loan Toolkit for prospective home buyers from ING Direct Australia. The app appeared in the U.S. App Store yesterday (here).  There's no mention of it on the bank's website yet, but Google pointed me to the well-designed microsite (here) supporting the app (screenshot below).  

It's pretty straightforward with just three functions:

• Calculators to determine how much you can afford to borrow and what the payments would be
• A call-me request form
• Average home prices by area

Screenshots from ING Direct Australia's new iPhone app (3 Sep 2009)

ING Direct Australia iPhone Home Loan Toolkit microsite (link, 3 Sep 2009)
Note: The five iPhone screenshots (above) rotate through the iPhone pictured below. Alternatively, users can scroll through the screens with the control under the phone.

-------------------------------------------------------------------------

Note: For more info on the native iPhone apps, see Online Banking Report: Mobile Banking via iPhone.:

A few weeks ago, we noted a milestone at Apple's iPhone App Store, 1000 apps available in the finance category (U.S. store). I was been curious how that compared to Google's Android Market so today I did a quick comparison.

The Android market now has a respectable 211 apps in the finance category. However, few financial institutions have staked a claim. Only, Bank of America and Alliant Credit Union, had branded apps (see note 1, 2).

In comparison, the iTunes App Store has 11 U.S. banking apps and 3 from U.S. credit unions. That's up from 6 banks and no credit unions when we published our most recent report on the subject (see note 3).  See the the following table for details. Did I miss any? Let me know in comments or email jim@netbanker.com

Source: Online Banking Report tally, 24 Aug 2009

1. In addition, Qualcomm's Firethorn unit has an app that works with several dozen banks and card issuers including Citi, Chase, Wachovia, SunTrust and USAA. It's ranked tenth in the Android Market and 15th in the iPhone App Store. Also, in the Android Market, Visa has a beta app that works with Chase cards ranked #77. However, according to commenters, that test is ending in September.
2. There are another 15-20 international banks listed in the iPhone App Store.
3. Our Online Banking Report on iPhone Mobile Banking was published March 11, 2009.

Today marked an Apple App Store milestone of sorts, the 1000th application available in the Finance category (USA store). Finance is less than 2% of the total store, which now stands at 63,300, according to AppShopper.com. 

Lucky number 1000 was Easy Mortgage (iTunes link), a $0.99 mortgage calculator from Italian developer Nexus (screenshot below).

Four other new Finance apps debuted today, just missing the 1000 mark: 

• #997 MLM: A multi-level marketing guide from PTAJ Marketing for $2.99
• #998 Renting: A guide to renting a house or apartment from also from PJAT Marketing for $2.99
• #999 Forex: A guide to foreign exchange trading again from PJAT Marketing
• #1001 TaxTax: A $1.99 sales tax calculator from Canbuffi Web Development

Bottom line: These thousand apps are just the tip of the iceberg for the Finance category. It will likely grow to well over 10,000 during the next few years as most major banks and credit unions add their own apps to the mix. 

Currently, there are fewer than 50 financial institutions with their own dedicated app, including eight of the top 15 (most popular based on recent download volume): 1st (Bank of America), 2nd (Chase), 3rd (Wells Fargo), 4th (PayPal), 8th (E*Trade), 12th (Citibank), 13th (USAA) and 14th (multiple banks via Firethorn).    

For more info on the features and benefits of a good financial institution iPhone app, see our recent Online Banking Report: Mobile Banking via iPhone (March 2009). 

Rumors abound that Apple will super-size its iPod Touch next year with a 7- to 10-inch-screen version. VentureBeat has a compelling picture (inset), although it's not likely to be authentic.

The thinking is that this device fits nicely between the $299 iPod Touch and the $999+ MacBook with a price in the
$600- to $700-range.

The device is expected to run the iPhone OS and use the same touchscreen interface as its much-smaller siblings. That makes it the perfect in-home device for running any of the 40,000+ apps available in App Store. 

Why it's important
Because there are apps for everything, this device could become the de facto controller for key in-home systems running the television, DVR, telephone (especially if it has a built-in web cam), heating and air conditioning, plus the audio system, of course. It will also be perfect for checking the weather in the morning, the traffic on the way out the door, reading feeds, twittering, and sharing YouTube videos and photos with visitors at the kitchen table. 

And while those are the interesting uses, the Apple device will also be a convenient way to access all types of information, from Google, to ESPN, to your bank balance, all with the touch of button.

Significance for banks and credit unions
If Apple works its magic yet again, this device could end up in the living room of half the upscale households in the world.

While this device can run a browser to access any website, the user experience is much better with a native app (see note 1). And when push notifications become available in the next OS release, it will be even better.

Note:
1. For more information on why you must build a native iPhone app for your financial institution, see our recent Online Banking Report on iPhone Mobile Banking.

More than 10 months after the iPhone App Store launched, two U.S. credit unions have joined the application marketplace, which numbers more than 40,000 in the U.S. store alone.

The first was Texas Dow Employees Credit Union (TDECU), whose ATM and shared-branch locator, Culoc8, launched on April 29, according to the company's Twitter page (below, link).

The TDECU app (see inset) is unbranded and can be offered by other CUs to their members. 

Eaton Family Credit Union is offering CuLoc8 to members on its website (see below).

------------------------------------------------------------------------------------------------

Yesterday, Tech CU, became the first credit union with a full-featured branded native iPhone app (App Store link, see note 1). The app (see below) includes full online banking functionality and an ATM/shared branch finder (second screenshot). The credit union also added something we haven't seen yet, an iPhone optimized feed of its blog, Money Savvy (third screenshot). Nice touch.

Tech CU has offered a mobile website since Sept. 2007. 

Note:
1. America First Credit Union was the first CU with native iPhone support via its participation in Firethorn's shared mobile banking app which launched in Nov. 2008.

Apple must be one of the more lucrative advertisers these days at the Wall Street Journal. Apple has bought the back page more times than I can count to show off the iPhone and more-importantly, the diversity of applications available (see inset, note 1).

Lately, Apple has run "theme" ads showing applications related to a single category. Last week (Thurs, 9 April), the back of the A section showed personal finance apps (see left column below). Yesterday, the apps all supported small business and ran on the back of Marketplace (B) section (see right column below).

The only app to make both lists: personal finance superstar, Mint, which even scored top billing in the personal finance page, occupying the upper-left corner, where it's blurb would likely score the highest readership. 

The Apple website also has themed app guides. The managing money page (see screenshot below) features again features Mint, which gets the biggest graphic, Bank of America, who's app was featured in dozens of Apple ads in 2008 and earlier this year, Bloomberg, Gas Cubby, iXpenseIt, Save Benjis, and Home Finder.

Bottom line: Financial institutions should think about how to add similar money management functionality to their mobile and online offers. As Aite's Ron Shevlin pointed out in a comment here last week (emphasis added):

.....(the FinovateStartup participants) you talk about are helping people manage their financial lives, while the banks are [still] focused on helping people manage their financial accounts.

Big difference.

Table: iPhone apps listed in recent WSJ ads (clockwise from upper left)

Apple's Money Management page on its Website (link, 16 Apr 2009)

Notes:
1. My apologies for the image quality, taken via iPhone naturally.
2. For more info, see our latest Online Banking Report: Mobile Banking via iPhone.

Apple's new iPhone operating system was announced last week. There are more than 100 new features that will make the phone even more valuable plus 1,000 new APIs to keep developers innovating like mad. The new OS will be available "this summer."

Most changes are relatively minor, but two are significant for online banking and personal finance apps:

• Push notifications: Apple currently offers this feature only on its built-in email and SMS application (see screenshot below). But with OS 3.0, application developers can push notifications to the iPhone without the app being launched. For banks, that means you can show users when a new transaction, message, or alert is available to view.
  
• In-app purchases: This is probably less important for financial institutions who generally don't charge transaction fees for mobile or online services. However, non-bank financial apps can now charge transaction fees for value-added services such as an expedited payment or a credit score. The transactions are processed via Apple so now customers needn't provide the app developer their credit card number.

Bottom line: We believe every financial institution large enough to offer online banking should support the iPhone platform. With OS 3.0, it's even more important to be in the App Store. For more information, see the latest Online Banking Report on Mobile 3.0 -- iPhone Edition (see announcement post).

iPhone home screen (30 March 2009) >>>
Here's my main iPhone screen showing push alerts (clockwise) for new text messages (11), new emails (196), voice mails (6), and application updates (2).

You'd think that seven months after Apple launched the App Store for the iPhone, it would no longer be news when a U.S. bank adds an application to the store.

It's not like a cost-prohibitive slotting fee is involved. Developers pay Apple exactly zero dollars to be listed in the store (note 1). Apple's revenue is from the 30% share of any fees charged for an app. All the bank apps are free, so that's not an issue.

But it is news since the addition of PNC Bank two weeks age (app here) brings the grand total of bank-specific apps to four, five if you count PayPal. Even if you include the several dozen banks supported by Firethorn's multi-bank app, there are still no more than 40 banks supported (note 2). And there's not a single credit union, yet. 

Here are the five App Store participants in order of their appearance:

• Bank of America and PayPal were both in the App Store when it first opened in July 2008 (post here)
• IBC Bank (powered by mFoundry) launched in Sept. 2008 (post here)
• Chase Bank launched Dec. 2008 (post here)
• PNC Bank (powered by mFoundry) launched late January 2009

Wells Fargo has an iPhone app, but it's not yet shown up in the official App Store.

PNC mobile banking app
PNC's entry is a full-featured app powered by mFoundry. Along with balance and transaction activity, it includes bill pay, funds transfer, and an ATM finder with location-based capabilities. Users must enable mobile banking from within online banking in order to use the app.

The app has risen from number 17 in the Finance category a week ago to 13 today (note 3). However, the app has not yet made it to the PNC website (note 4).

PNC iPhone App screenshots (11 Feb 2009)

Notes:
1. The app does need to be approved by Apple, a process that can take weeks or longer.
2. Users can also track thousands of financial institutions through Mint or PageOnce.
3. Bank of America is #1, Chase is #4, PayPal is #5, Mint is #6, Firethorn is #9.
4. A PNC.com site search for "iphone" yielded just one result, an iphone listed in a mobile banking compatibility table. (Off topic: Note to PNC Bank, your site search doesn't function in Firefox 3.0).
5. For more information on the market, see our Online Banking Report on Mobile Banking and the latest forecast in last month's Online Banking Report Online & Mobile Forecast.

No one knows for sure how Apple compiles the list of its top-selling iPhone apps, but it's related to how many are sold during the past few hours. I've seen speculation that the measurement period is 2 hours (see note 1).

But there is no doubt about the benefits of rising to the top. The winner receives prime exposure in the iTunes Store and on the iPhone itself (see screenshots below).

I've checked the Finance category rankings dozens of times since the store opened in July, and the top app had always been Bloomberg with Bank of America usually the runnerup.

But Friday, a new top seller emerged in the Free list in the Finance category (note 2), Chase Mobile  while Bloomberg and BofA were each knocked down a spot to numbers 2 and 3. The Chase app was released just one week ago (12 Dec). But by Saturday morning (20 Dec), Chase had already been replaced at the top by online personal finance startup Mint, which released its iPhone app Monday (15 Dec), but it didn't show up in the iTunes store until 1 AM Friday.  Mint stayed at the top all weekend and is still number one now (10 AM Pacific, 22 Dec).

In the screenshot below and right, you can see the free publicity derived from holding the top spot. Also, note that you should put your name into the application. Bank of America, ranked number 3, neglected to include its name in the title, so it loses some branding value. Although, they would have to use BofA to fit into the space.  

Chase App (link to iphone App)
The Chase app itself is attractive and is similar to Bank of America's with a login button to the website and an ATM/branch-finder utility. As of this evening, 64 reviews have been posted with an average 3.5-star rating out of five, slightly better than the 3-star rating of Bank of America's iPhone app with similar features.

Mint App (link to iPhone app)
As expected from a company that is carefully using design to help distinguish it from the pack, Mint's new app is great looking. Across all aggregated accounts, the mobile app shows account balances, transactions, and progress towards budget goals. A nifty alerts icon on the bottom provides a convenient way for users to keep tabs on important info on the go.

Another difference from most banking apps: Mint lets users choose whether they want password protection enabled after their initial login. If you choose to log out, then the app erases all data in memory, and you must log back in next time. If you choose not to log out, then your data remains visible until the next visit with no login required (note 4). This is a great convenience, but something that may not be allowed at regulated financial institutions.

Some users have reported trouble with the app on older phones. On my first-generation iPhone running version 2.1 software, the Mint app wouldn't download. But once I upgraded the iPhone software to version 2.2, it downloaded flawlessly and all functions worked perfectly. In Mint's forum, some users were reporting problems with the Budget feature, but it seems to work fine for me (forum thread) (note 3).

Top Apps in the finance category of iTunes' App Store
(7 PM Pacific, 19 Dec 2008) 

 Top free finance apps list displayed on iPhone:
          at 7 PM Pacific, Fri. Dec. 19                               at  2 PM Pacific, Sat. Dec. 20         

Chase Mobile iPhone app                    Mint iPhone app main screen
main screen (19 Dec 2009)                          (19 Dec 2009)

Notes:
1. That 2-hour window could be about right. When I made this screenshot, the new Mint app was at number 10; two hours later (9 PM) it had risen to number 5 (see screenshot above). By 9 AM Saturday morning (20 Dec) it had risen to number 1.

2. The App Store divides the top apps into two categories, free and paid. The top 20 free apps are listed on the right side and the top 20 paid apps are listed on the left. The apps in the middle are listed by newest first.

3. These operating system incompatibilities, a real problem in pre-1995 online banking services, had largely been left behind when banks embraced the Web in the mid-1990s. Unfortunately, mobile banking will add to your tech-support costs. 

4. Mint also reminds users that they can choose to lock their entire iPhone for extra security.

5. For more info on the market, see our Online Banking Report on Mobile Banking. 

I'm certain most major PFM providers will have an iPhone app within the next six to 12 months. It's a valuable product extension from a functionality standpoint (see note 1). Even more important are the marketing benefits from blogger/press coverage and the App Store listing itself. 

Mint posted a blog entry last week reviewing ten iPhone finance apps. The post drew two dozen comments, most asking when a Mint app would be released for the iPhone. Mint Product VP Aaron Forth replied, "We are busy working on one now."

Most of the better-funded PFM companies are likely working on an iPhone app, but the approval process at Apple can easily take a month or more (one developer's story is chronicled here). So we expect to see them trickle out over the coming months.

The first established online PFM to make it into the iPhone App Store is Moneytrakin', the Barcelona, Spain-based multi-language, multi-currency PFM (note 2). We covered its launch more than two years ago (here).

The company recently announced it had surpassed 5 million transactions tracked. Assuming 250 per customer, that's 20,000 active users. According to Compete, U.S. website traffic averages 1,000 to 2,000 per month. But many (most?) of Moneytrackin's customers are outside the United States.

The Moneytrackin' program, released on Sept. 19, is currently the seventh most popular app in the Finance category.

Notes:
1. For more information, see our Online Banking Report on Personal Finance Features.

2. There are at least a dozen check registers and mini PFMs in the App Store, but none are from established online PFM providers. The only exception is iBuxfer, which claims to work with Buxfer using its API, but was not developed by the company. And in fact, according to the comments in the App Store, may be violating Buxfer's terms of service. All the more reason to get your own app into the store before someone else does.

Since the July opening of Apple's App Store, we've been tracking the apps in the Finance category (see previous coverage here). But there are also several apps in the Productivity category of interest to financial institutions: the eWallets.

There are two wallets available in the U.S. iTunes store:

• eWallet from Ilium Software: #46 in popularity in Productivity with a cost of $9.95 and rated 3.5 stars (out of 5) across 143 reviews (see inset)
• Memengo Wallet: #48 in Productivity with a $0.99 cost and rated 4 stars across 43 reviews (website)

Web-based eWallets never took off because of security concerns and because they provided only marginal improvements in desktop productivity. However, a mobile version has more utility owing to sticky notes with password reminders and credit card info, helpful to users away from their desks.

How it works
Storage of usernames and passwords for websites is the primary use of eWallet, but it also has a Finance category (see inset above) where users can store credit card numbers and contact info (see screenshots below).

That info is helpful when using a card to make a purchase online or through the mobile phone. It's also a great place to store the info in case the card itself is lost or stolen.

Financial institution opportunities
While these apps haven't gained an overwhelming following, a financial institution could offer a free version that highlights its own card offerings while providing storage space for other card numbers. That way, you get your logo on the iPhone instead of Mint, Wesabe, or some other financial institution. 

The bank-branded eWallet could also include a financial calculator and direct connection to online banking.

 Note:
1. For more info see our Online Banking Repot on Mobile Money & Payments.

According to TechCrunch, the $0.99 tip calculator app from TapTapTap has been downloaded 3,200 times in the month it's been available. Net income to the developer, after Apple takes its 30% cut, is $2,200.

TapTapTap also markets a much more sophisticated location-based search tool that has generated $50,000 in revenues for the developer.

Tipulator is ranked number 20 in our Aug. 5 rundown of the top-20 banking and finance apps. Today it ranked number 27.

Apple ranks the most popular apps within each category, but does not provide download totals. Tipulator numbers were provided by developer.

What it means
1. iPhone users, so far, are willing to pay for apps. Who would have thought that more than 3,000 people would go to the trouble to download an app to help them multiply their bill times 15% to 20%? And there are two tip calculators that ranked higher in the App Store.

2. There is real demand for mobile financial tools, even very simple ones. Financial institutions should consider launching a branded calculator app in the Apple App Store.

It's been almost a month since Apple launched its App Store for native iPhone apps. According to the company, 25 million have been downloaded, an impressive one-million-per-day pace (11 Aug update: The company reported 60 million downloads, with $30 million in sales, during the first 30 days.)

Luckily for banking geeks, Apple added a Finance category (see screenshot below), so it's easier to track what's popular in our sector. As of early today, a total of 42 finance apps were listed. The 20 most popular were (note 1): 

Source: Netbanker/Online Banking Report analysis of Apple App Store data, 5 Aug 2008
PFM = Personal financial management
*Release date of latest version; there may have been previous versions released earlier; currently reviews carry over from previous versions
**Average user rating on 1-to-5 point scale
***Number of user reviews posted

 What's notable:

• Nine apps have a download fee ranging from $0.99 to $9.99
• Only four have a user-rating of 4.0 or better (on a five-point scale): Balance (4.5), Bloomberg (4.0), LoanShark (4.5) and TipTap (4.0)
• Three apps, including two of the most popular, are rated below 3.0: BofA (2.5), PayPal (2.0) and MyAccounts to Go (2.5)
• The most-reviewed apps are Bloomberg (337 user reviews) and BofA's mobile banking (323) (see previous coverage)

What's innovative:
I haven't used any of the apps yet, but from reading the descriptions, there's not much new here (notes 3, 4). The apps fall into four main categories:

• Tip calculators
• Other financial calculators such as loan payments
• Expense/check registers
• Personal finance tracking apps

Even though these functions aren't very advanced, the ability to access them easily from your mobile phone makes them more interesting. And banks looking to create a useful iPhone app should take note. BofA was criticized in early user reviews for posting little more than a landing page for its normal mobile banking screen (see screenshot above).

Financial institutions would likely find a more receptive audience if a couple useful functions were added to the application besides an online banking login screen. It would be relatively trivial to add an expense register, tip calculator and other calculator functions to the banking app. 

Notes:
1. Apple does not provide any metrics on how many times the apps have been downloaded. It just lists them in rank order.

2. Download transactions from more than 200 financial institutions supporting Intuit's DirectConnect

3. The most interesting app is SplashMoney's account aggregation app that allows you to download transactions from more than 200 financial institutions that support Intuit's Direct Connect.

4. See our Online Banking Report on Mobile Banking for more info.

Kiwibank has one of the most eye-catching homepage designs in the world.  Who can resist a lime green Smart Car with four monstrous speakers strapped to the roof?

As I was obsessing about iPhone apps this week (see note 1), I ran across Kiwibank's landing page for iPhone banking (see second screenshot below). Now that the iPhone has gone global, we'll see if more banks leverage the iPhone hype, something that didn't really happen in the United States so much. According to CNet Australia, ANZ is building an iPhone-specific interface, but a search of the ANZ website found nothing.

Kiwibank's homepage iPhone promo, one of three rotating in the lower right, leads to the not-so-exciting landing page. Still, when you are riding the hype, you don't necessarily have to put that much effort into your own work (see note 2), just grab ahold of Apple's coattails and hang on tight.

Kiwibank homepage featuring iPhone promo (11 July 2008)

Kiwi Bank iPhone banking landing page (11 July 2008)

Notes:
1. Yesterday, I promised it was my last iPhone post for a while, but I couldn't resist one more. Consider it a Saturday bonus post.

2. Case-in-point, the BofA non-app app being dissed by the vast majority of early-early-adopter reviewers at the Apple App Store (see yesterday's post).

The good news: Of the 135 free applications in the new iTunes App Store, Bank of America's is a solid number 20, three spots ahead of PayPal, according to rankings within iTunes this morning.

The bad news: The first batch of reviewers hated the app. Their main complaint: It's not really a native app, just a front door to the bank's existing mobile site.

The reviews: On a 5-star scale with one star the lowest choice, the app has only a 1.5-star rating (see note 1). Of the 81 reviews, only 19 rated it above one star. Throwing out the five 5-star ratings which are probably from people associated with the product, that leaves only 14 above the bottom rating, an abysmal score by any standard. Following is the breakdown:

Source: Online Banking Report review of iTunes data, 11AM PST, 11 July 2008

What's innovative?
1. I was astounded to see 81 reviews in the App Store already. It just opened this morning! It should be noted that you don't have to actually download the app to post a review. So if and when you post an app here, be prepared for criticism. Even more important, this demonstrates the impact the user voice will have going forward (see note 2).

2. Early adopters, especially techies, can be brutally honest, especially with large corporate efforts deemed lame. But even though the overall grade was very poor, a number of reviewers pointed out that the automatic ATM locator was a significant improvement.

3. BofA needs to upgrade this app ASAP. Some of the criticisms about font size and design can be fixed relatively easily.

Summary
Despite the harsh criticism from the first batch of reviewers, I think BofA did the right thing strategically. It's too bad they didn't have something a little flashier, but the bank will get far more mileage by being the first bank in the App Store that it will lose by disappointing the mobile early adopters. It's unlikely they will lose any business from the negative reviews. They are mostly in the "you should have done better" category, not the "BofA sucks" variety.

You have only one chance to be first, and BofA took it. No one else will ever be able to say they were the first bank in the iPhone (who's going to be the first credit union?). But the bank better get cracking on version 2.0! (see note 3)

Notes:
1. The only other app from a financial services company was Paypal, which mustered a meager 2-star rating. But it elicited only one-sixth the number of reviewers, just 13. Because you don't have to actually download the app to post a review, BofA may be getting slammed by people just reading the reviews and jumping on the bandwagon with me-too critiques.

2. See our latest Online Banking Report for more on the growing importance of user reviews. We've also published reports on Mobile Banking and Mobile Payments.

3. This post marks the end of iPhone week at Netbanker. We'll get back to our regularly scheduled programming next week.

Bank of America once again proved its mobile mettle as the only financial institution to have a native app available at the launch of Apple's new App Store (note 1). PayPal also launched an app on Day 1 (see screenshot below). Both are free.

Bank of America iPhone 2.0 App in Apple App Store in iTunes (10 July 2008)

Apple launched the store today within iTunes (see note 1). There are 552 apps at launch according to Pinch Media, Here's the price breakdown:

• Free - 135
• $0.99 - 85
• $1.99 to $3.99 - 110*
• $4.99 - 62
• $5.99 to $8.99 - 35*
• $9.99 - 82
• more than $10 - 40*

The new Finance category in the App Store has 23 entries at launch. Most are small utilities for calculating tips or splitting the dinner check. Only two recognizable brands are available, PayPal (lower left) and Bank of America, which by design or omission, is listed not with its name but as simply "mobile banking."

Finance listings in Apple App Store in iTune 7.7 (10 July 2008)

PayPal App (10 July 2008)

Notes:

*Interpolated from graph, plus or minus 3%

1. To view the App Store, download iTunes v. 7.7. Some users including myself (Windows bug?) have reported not being able to see it even after updating iTunes. I was able to access through this link published by TechCrunch.

It took almost six months, but Bank of America finally has company in Apple's iPhone Web App Directory (see note 1).

USAA posted its iPhone-optimized Web app on July 2 (here). USAA's browser-based app can be used by anyone with online access to their USAA accounts
(see note 2).

The resolution in the screenshot (right) is not great, but you can see the bank is using large iPhone-like icons to navigate to the main functions:

• Balance/transaction inquiry
• Funds transfer
• Bill payment
• Stock trading
• Order auto insurance cards

Provident Bank added its mShift-powered solution to the Apple directory June 11. Users are able to perform all typical online banking functions: balance/transaction inquiry, transfer funds, and pay bills. Its pedestrian format (see below) is clearly built to work across many different mobile devices. The small links would be harder to navigate on an iPhone compared to USAA's icons.

See previous iPhone banking coverage here.

Notes:
1. BofA was first in the United States. Germany's Postbank was the first bank in the world in the app directory, beating BofA by a few weeks last fall.

2. These are mobile browser-based solutions optimized for the iPhone. They are NOT native apps running on the iPhone OS, soon to be featured in Apple's App Store (see previous post).

I've written about how the iPhone could change the way consumers use mobile phones to access data (see note 1). But this slide from the Steve Jobs keynote yesterday at Apple's Worldwide Developers Conference (WWDC), says it much better:

In case you can't read the slide, it says that 98% of iPhone users use the built-in Safari browser, 94% use email and 90% use text messaging. That's an amazing level of usage for what used to be considered "advanced" smartphone features. So far, the impact on ecommerce companies has been relatively small, with just 6 million users worldwide. But with Apple dropping the price by 50% to $199, there will soon be 10, 20, or 30 million Americans connecting to the Web via iPhone. If 90%+ use the browser and messaging, it will have a major impact in online/mobile banking usage.

New App Store
And to help those millions of new users find useful things to do on their phone, Apple is building a new App Store, accessible directly from the main deck of the iPhone once users download the 2.0 software in July. The App Store will include thousands of applications optimized for the iPhone that can be downloaded over the air.

Some will have a cost, with the developer keeping 70% of the revenue, but most are expected to be free. Since there is NO COST to list your app in Apple's App Store (see update below), financial services companies should rush to get their app loaded as close to the July 11 launch date as possible.

So far, only two banks, Bank of America and Germany's Postbank, have included their apps in the current online applications directory (here). A number of other financial apps are listed including Wesabe, Buxfer, and the latest, QuickBooks from Intuit (see inset right and screenshots below). Expect many more in the months and years to come.

Update 11 June: Important clarification from commenter "gerontius" (number 3 below). The current app directory includes webpages optimized for the iPhone. The new App Directory will include "native" apps that run directly on the iPhone operating system. That makes the bar quite a bit higher, depending on what you want to do. 

Bank of America    Buxfer  

myBudget        Postbank 

Wesabe           Yodlee 

Note:

1. For more info, see our Online Banking Report on Mobile Banking

You don't have to be Google, NBC or Steve Jobs's cousin to get your logo placed on one of the most coveted pieces of real estate on the planet, the main screen of Apple's iPhone. Now anyone can do it for about the cost of phone service for a month. 

When we first wrote about the iPhone a year ago (here), we created a fake picture of it with a Wells Fargo logo superimposed on the main screen (see inset). At that time, we would never have guessed that a year later Apple would enable any website to create an iPhone main screen icon by simply dropping a line of code into their website. 

It's as simple as creating favicons, those little symbols that appear next to your URL in the browser address bar. Here's a simple 25-word explanation of how to do it. For more info, consult the Apple iPhone Dev Center here.

Once you have the code installed, users with updated iPhone software will be able to install your icon by navigating to your page, clicking on the plus button at the bottom of the screen, and selecting "Add to Home Screen."

Last week, we received a tremendous comment/question from one of our readers, an officer in the risk-management department at a very large U.S. financial institution. His question, “I may have overlooked it, but did not see too much discussion around mobile banking fraud threats, such as mobile malware and smishing. Are these threats real? If so, what controls are financial institutions putting in place to mitigate these risks? Are there other mobile banking risks on the horizon?” 

That's a great question. Yes, threats of malware are real, and I expect to see the number of attacks grow exponentially greater over the next 18 months. However, so far only a handful of attacks have been recorded. See Wikipedia for a listing of mobile viruses.

The next question, “What controls are financial institutions putting in place?” The majority of financial institutions with mobile banking are using a vendor product; therefore, they are relying on the tools built in to the solution. In my previous entry on the subject (see Mobile Banking), I explained that after reviewing solutions from numerous vendors I believed they all had done a top-notch job making information security the number one priority. So, unless you are going to follow Bank of America and Wells Fargo down the path of an in-house WAP solution, you should find that the vendor has already addressed the issue on your behalf (see note 1).

That said, there is one HUGE security risk not receiving the attention it deserves and that is – THE CUSTOMER. As with online banking, the most critical element in reducing fraud is to simply educate the customer. Education can take a number of forms, including awareness campaigns, security checklists, recommended settings, and providing examples of how other clients have been deceived.

One good resource is the Microsoft page:  

Also, there are a number of companies already providing mobile antivirus security software including (note 2):

Bullgard
MyMobiSafe
Symantec
UMU
AirScanner
Kaspersky
F-Secure
Trend Micro

And as my Apple friends already know, the iPhone utilizes the OS X platform. While there is no guarantee, the accepted belief is that viruses are not an issue for Apple and that security software is not needed (note 1).

I hope this provides a better understanding of the mobile security environment. I encourage others to comment or send questions.

Notes:
(1) This is an opinion and not an implied guarantee of security or performance.
(2) This is in no way an endorsement of the product(s) or guarantee of performance. These were the top search results for the keywords “mobile antivirus security.”