There doesn't seem to be a single killer app for mobile. But there is a growing list of things that mobile does better than online that will eventually tip the scales in favor of the new channel. Here's what we've seen so far:

• Location-based ATM/branch finders (here)
• Remote check depositing (here)
• Simple login with 4-digit pin (here)
• Insurance discounts after graduating from iPhone-based program (here)

The latest addition to the list:

• PayPal's Bump to Pay (see video below): Users of PayPal's latest iPhone app can transfer funds to each other merely by entering the amount and moving their phones within close proximity of each other (see screenshots below).

PayPal demos bump to pay

As David Eads points out at Mobile Manifesto, bumping to pay has some drawbacks in the real world:  

.....most of the time I want to send money to someone, I’m not standing beside them. And if I am, most of the time I would feel awkward actually touching the person. Imaging bumping someone for admission to a high school football game. Imagine bumping a street vendor for a newspaper or flowers. Imagine bumping a scalper for tickets outside the game.

My take: I agree with David that physically placing iPhones next to each other seems awkward today. But then again, so was writing paper checks back in the day when everything was paid for in cash/coins.

If so-called bump pay is super-convenient, fairly priced, and the perceived security issues are overcome, there's no reason why it couldn't become the predominant method of person-to-person payments. It's way too early to make any kind of prediction, I'm just saying, don't dismiss it yet.

David's closing remark is spot on:

The key for P2P is getting people comfortable with the idea of transacting electronically between individuals. Bumping and Zooming makes it more fun.

Bumping is now an integral part of PayPal's iPhone app

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Off-topic addendum: As much as we like new bells and whistles, bump-to-pay pales in comparison to the really big news at PayPal this week: the announcement that it's teaming with China UnionPay and Singapore's DBS Bank to offer payment services. The 2-year DBS deal will put PayPal in the hands of the bank's four million customers, 1.3 million of which are currently banking online.

How big are these deals? A good indicator is PayPal's plan to double its staff in the region to 2,000 employees. Wow, has any financial company anywhere in the world added 1,000 to its staff in the past two years?

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Note: For more coverage of mobile banking and payments seen the most recent issue from Online Banking Report.

The new service, launched Sep. 2009, is delivered through a dedicated site, searscreditscore.com. Since Sears cardholders must make a purchase each year to use the site, it provides an ongoing usage incentive.

The Credit Karma-powered service is clearly branded as a Sears and Kmart offering (note 2, screenshot #1). Interestingly, Sears also takes the opportunity to offer targeted advertising space to financial companies (screenshot #3). It also markets the credit-analysis service on its own credit card site (screenshot #2).

While Credit Karma traditionally derived revenue from advertising on its site, this move into the private-label channel provides additional growth opportunities. The Sears private-label site had nearly 140,000 unique visitors in February, about one-third the total at Credit Karma (see table below). It's a good deal for Sears, too: Offering credit-score analysis differentiates it from other retail card providers and conveys concern about its customers' financial well-being.

Website traffic at searscreditscore.com vs. creditkarma.com   
Source: Compete.com, March 2010 (link)

1. The Sears credit score site, powered by Credit Karma

2. Sears promotes the credit score service on its website

3. Sample page from Searscreditscore.com
Note ads for Citi and ING Direct

Notes:
1. Sears cards are issued by Citibank, one of the advertisers in the private-label site.
2. Kmart acquired Sears in 2004.

There is little doubt that mobile is the next online, not just in banking, but with many information-rich, time-sensitive services. Even in the online-centric United States, we expect mobile banking to eclipse online by the end of the decade. 

Another way to look at it: Starting from essentially zero just three years ago, more than half of the U.S. online banking population will be using mobile banking, by 2015. That's zero-to-40 million households in just eight years.

Most financial institutions should be making their mobile bets during 2010/2011. The report outlines ten ways that mobile banking supports overall strategic goals at financial institutions. It also includes our ten-year forecast for U.S. mobile adoption (note 1).

This report is number four in a series we've published on the mobile area during the past three years:

Note:
1. The mobile forecast was originally published last month in our year-end recap.

The latest novel financial app: State Farm's Steer Clear program that provides auto insurance discounts "up to 15%" for new drivers (under age 25) that pass its safe driving program. Users can undergo the self-assessment program online or off, but the app makes it easier and with a built-in stopwatch (screenshot below) to track the required 20 practice drives. See how it works in the company's video below (press release here; iTunes link here). 

As much as I like it, the State Farm app doesn't quite make it into the magical category. Had it used GPS to automatically track the 20 practice drives, it might have passed the bar. I'm sure that's in a future version.

Regardless, it's clever, unique and positions the company well with the youth market and their parents that often foot the insurance bills. That's a good return on the small investment needed to port the program over to a mobile app (note 2).

Notes:
1. I am using two years, since that predates the opening of the iPhone App Store in July 2008.
2. Read more about the strategic advantages mobile banking can give your financial institution in our latest Online Banking Report published today.

Half of Fast Company's 10 Most Innovative Financial Companies are Finovate Alums

Fast Company's list of the 10 most innovative financial companies includes five Finovate alums - FiLife, Intuit, Yodlee, Credit.com, and Simplifi. FiLife was not only #1 in finance, but also the only financial company to be ranked in the overall Top 50.

Finovate alumni commanded the top three positions, with Intuit and Yodlee following FiLife. Credit.com was #7 and Simplifi was #9 (full post here).

FiLife and Mint Top Finovate Alumni Traffic Chart

FiLife also has the highest website traffic among Finovate alums with more than 2.7 million visitors. Mint was second with 1.7 million. FiLife and Mint were also the fastest-growing alumni sites, gaining 2.6 million and 612,000 visitors respectively over the previous year.

And the zero-60 awards go to ThreatMetrix and Home-Account who both went from zero to nearly 200,000 unique visitors, a phenomenal amount of traffic for a financial company in their first year (full post here).

Firethorn App Provides Mobile Access to More Than 3,700 Financial Institutions

Firethorn has updated its mobile banking app to allow consumers to access accounts at more than 3,700 U.S. financial institutions. Expanding beyond its current list of integrated banking partners brings the company's app to a wider range of consumers.

Since its mobile app interfaces with existing online banking systems, Firethorn can provide consumers with mobile banking even when their bank doesn't support it. The app also gives users the ability to access account information from multiple institutions from within a single interface (full post here).

Jawalla Adds Skype and Twitter Alerts to its Online Banking Platform

Jwaala has added Twitter and (in what we believe to be a first) Skype alerting capabilities to its MoneyTracker BOB (Better Online Banking) platform. The addition gives Jwaala's clients the ability to offer consumer alerts through channels already familiar to their customers.

Alert systems are important to financial institutions because they provide personalized information to customers where and when they most need it. Expanding its alert capabilities helps Jwaala differentiate itself from competing platforms (full post here).

Unfortunately, it doesn't appear the service has gained much traction yet. The 103,000-member St. Louis, MO-based CU has 322 Twitter followers on its public feed and about 200 on its protected TweetMyMoney feed where the t-banking takes place (Note: Updated per comment). The majority of public feed followers are analysts, bloggers, and other credit unions.

But Vantage's Twitter move isn't about number of users. It's about keeping its brand relevant with its social networking members. And splashing Twitter across your homepage is a great way to do that (see screenshot below).

Now Vantage is back at it, partnering with Finovate-alum, Geezeo to offer state-of-the-art online personal financial management (press release). It will be fun to see what VCU EVP Eric Acree, a Filene i3 member, does with the Geezeo platform. I think it's safe to say that they will put a novel spin on PFM.   

VCU is Geezeo's fourth white-label credit union client; the other three are Stanford Federal Credit Union (previous post, note 1), Alliant Credit Union, and 1st Advantage FCU. The company is also working with 1st Mariner Bank (updated March 1 per comments).

Vantage CU continues to promote its Twitter features on its homepage
(26 Feb. 2010)

Notes:
1. Stanford FCU's website still says Geezeo-powered MyMo is "coming soon" (link to the Oct. 31, 2009, dated announcement), but the link to the new service has been pulled from the SFCU homepage. 
2. For more info, see our Online Banking Report: Leveraging Twitter (May 2009)

It's enlightening to see the process through the eyes of a credit newcomer. Even though he understands credit cards intellectually and has used debit/prepaid cards for years, a number of things were still less than obvious to him as he went about activating the card over the phone, using it for the first time, signing up for online banking, and paying his first monthly bill. For example:

• The initial card-activation process was a mystery to him. He did not expect to have to call the bank when the card arrived. And the conversation he had with the CSR was confusing. I heard only his side of the call, but evidently Capital One pitched both credit insurance and ID protection services. He successfully said no to ID protection, but to his surprise, the first bill had a 1% fee tacked on for credit insurance, which he absolutely does not want (it's only a $300 credit line).
• He's very concerned he'll miss the payment due date, which seems so far into the future, given the lag in posting, combined with the grace period. The payment on his first charge was more than six weeks later. To him, it almost seemed to too good to be true, and also made it harder to remember.
• He doesn't have experience writing checks nor does he even have stamps around the dorm room; so even the simple act of paying the bill each month is not as easy as it seems. I helped him set up his checking account for ACH payments (see #7 and #7a below), but I'm not sure that would have been obvious to him had I not been looking over his shoulder.
• I also helped him set up mobile and email alerts to remind him to pay, but again, without his father pitching in, I'm not sure he would have known to do that. He hasn't set up alerts on his checking account because he didn't know they existed.

My take: For the most part, things have gone smoothly, and Capital One has done a good job bringing him on board (see below). But it made a mistake with him, one that could ultimately cost the card issuer my son's long-term loyalty, the apparent "misunderstanding" about his agreeing to add credit insurance to the account. 

And it only netted the bank $0.93.

I was surprised how upset my son was at the credit insurance fee tacked onto his bill. Even though it was less than a buck, he was determined to reach someone at the bank right away to get it removed and stopped. He felt that the bank used his naivete against him. He felt betrayed and preyed upon. That's not a good way to start a relationship.

Capital One Online Banking/Card Sign-up Process
I took the opportunity to document Capital One's online banking sign-up process. It was clean and intuitive and took just a few minutes.

Step 1: Terms and conditions (13 Feb. 2010)
Note: The first page, shown below, was reached through a link in an onboarding email message encouraging signup for online banking.

Step 2: Authentication

Step #3: Select username and password
Note: Email address was prefilled from the info from original online app

Step #4: Choose security questions

Step #5: Encouragement to sign up for estatements
Note: Default set to Yes; also, there was no incentive to go paperless,
even $1 might have swayed him

Note: You must call customer service to switch from paperless to paper statement, again a disincentive to choosing paperless

#6 Confirmation (with a dash of humor)

#7 Set up payment account

#7a Confirmation